Multilateral Diplomacy and the Economics of Change 9766371113, 9789766371111

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Multilateral Diplomacy and the Economics of Change

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Multilateral Diplomacy and the Economics of Change

The Third World and The New International Economic Order

DENIS BENN

Ian Randle Publishers Kingston • Miami

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First published in Jamaica, 2003 by Ian Randle Publishers 11 Cunningham Avenue Box 686, Kingston 6 www.ianrandlepublishers.com Benn, Denis Multilateral diplomacy and the economics of change: the Third World and the New International Economic Order / Denis M. Benn p. ;

cm

Bibliography : p.

. – Includes index

ISBN 976-637-111-3

Epub Edition @ October 2013 ISBN: 978-976-637-829-5 1. New International Economic Order 3. Third World – Economic conditions I. Title 337.1724

2. International economic relations

dc21

A CIP catalogue record for this book is available from the National Library of Jamaica.

Multilateral diplomacy and the economics of change. Copyright © 2003 by Denis Benn. All rights reserved under International and Pan-American Conventions. By payment of the required fees, you have been granted the nonexclusive, non-transferable right to access and read the text of this e-book on screen. No part of this text may be reproduced, transmitted, downloaded, decompiled reverseengineered, or stored in or introduced into any information storage and retrieval system, in any form or by any means, whether electronic or mechanical, now known or hereinafter invented, without the express written permission of Ian Randle Publishers. Book and cover design by Shelly-Gail Cooper

Printed and bound in the United States of America

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CONTENTS Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii Acronyms and Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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The Developing Countries as Actors in the International Economic System. . . . . . . . . . . . . . . . . . . . . . . . . 1

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Evolution and Structure of the International Economic System . . . . . . . . . . . . . . . . . . . . . . .

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The Demand for a New International Economic Order: Setting the Agenda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

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Negotiations on the New International Economic Order (1975–1977): The Search for Consensus . . . . . . . . . . . 48

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Negotiations on the New International Economic Order (1978–1983): A Chequered Journey. . . . . . . . . . . . . . . . 87

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A Comparative Analysis of the Negotiating Strategies of the Developed and the Developing Countries . . . . . . . . . . 125

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Economic Cooperation Among Developing Countries (ECDC) as a Strategy for Change . . . . . . . . . . . . . . . 144

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The Political Context of the Negotiations on the New International Economic Order . . . . . . . . . . . . . . . 177

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187 Appendices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191 Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210

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Preface

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he adoption of the Declaration and Programme of Action on the Establishment of the New International Economic Order (NIEO) by the Sixth Special Session of the UN General Assembly in April 1974 generated high hopes on the part of developing countries concerning the prospect of effecting fundamental structural change in the international economic system. They saw this both as a means of accelerating the pace of their development and as a necessary precondition for putting an end to the inequality which had traditionally characterised relations between the developed and developing countries. Unfortunately, despite the numerous meetings held and the intensive debates that took place between 1974 and 1984 on the establishment of the new order, only modest progress was made towards the realisation of this objective and, indeed, since 1984, it has not been pursued as a serious policy option, at least not in its original form. Be that as it may, the negotiations on the establishment of the NIEO dominated the agenda of international economic conferences between 1974 and 1984 and became the centrepiece of the negotiations on development during the period. In a sense, it may be said that as the East-West ideological struggle dominated international relations during the 1950s and 1960s, so did the North-South debate on the NIEO dominate the 1970s and the early 1980s because of its perceived importance to the economic situation of developing countries and to the international community as a whole. The North-South dialogue, as it came to be called, has been the subject of a considerable body of literature within the UN System and has also attracted some analysis in academic circles. However, much of the academic literature, as well as journalistic commentaries on the subject has been dominated by writers from developed countries and, has, in varying degrees, reflected the assumptions and preoccupations prevailing in these countries. In general, while there have been some sympathetic voices in support of the cause of developing countries, the bulk of this literature reflects attitudes which range from scepticism regarding the legitimacy of the demands of the developing countries to outright rejection of the arguments in favour of any fundamental change in the international economic system, which many argued could be made to function effectively with minor modifications. Perhaps the most conspicuous weakness of the body of literature on the subject is its failure to deal with the historical dimension of development and, more particularly, underdevelopment. Because of a reluctance to deal with the legacy of imperialism and colonial domination, insufficient attention has been

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paid to the analysis of the structures underpinning the economic relations between developed and developing countries, which have supported the prosperity of the former while perpetuating the underdevelopment of the latter on the basis of a carefully constructed pattern of unequal exchange. Needless to say, these attitudes to the North-South dialogue derived from the assumptions of mainstream economic theories prevalent in the developed countries which influenced the outlook of policy-makers in these countries who had responsibility for dealing with the issue of change in the international economic system. Beginning in the 1980s, these tendencies were reinforced by the economic philosophy of the new conservatism which succeeded in driving Keynesianism into retreat. Proponents of the new economic conservatism, armed with supplyside economic theories and an unwavering commitment to private initiative and wealth as well as the philosophy of laissez-faire, advocated solutions based on ‘the magic of the market place’ and even viewed poverty as a necessity, if only to spur the ambition of the poor. One of the more important consequences for developing countries was the tendency to substitute increasing doses of private investment as the engine of their development and a corresponding decrease in the emphasis on the developmental role of government which was rationalised on the basis of minimalist theories of the state. An important premise of this philosophy is that economic prosperity is determined primarily by domestic economic policy and less so by the operation of the international economic system. With such attitudes and assumptions holding sway, the prospects for serious negotiations, in the traditional way, on fundamental change in the international economic system grew more and more remote. Given the negative assessment by a number of commentators on the merits of the NIEO, there is need for a statement which reflects the point of view of the developing countries in order to put the issue in a more balanced perspective. The present study is intended to present a Third World perspective on the debate on change in the international economic system that was implicit in the demand for a new international economic order which occurred during the period 1974 to 1984. Another important consideration which has motivated this study is the fact that, although the negotiations on the NIEO took place more than two decades ago and, notwithstanding the fundamental changes which have occurred in the international economic system since then, the experience remains extremely relevant. Many of the issues which were the subject of the NIEO negotiations have resurfaced in the current negotiations taking place between the developed and developing countries in various international economic forums, most notably in the World Trade Organisation (WTO). In a

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sense, therefore, the two sets of negotiations reflect an essential continuity in the struggle by the developing countries to ensure that the international economic system operates in a manner that is supportive of their development aspirations. Much, therefore, can be learnt from an in-depth study of the experience of the negotiations on the NIEO, about which, unfortunately, a majority of the present policy makers in the developing world are unaware. In terms of methodology, a number of theoretical frameworks have been utilised in the analysis of international relations, including those relating to the negotiations that take place on an ongoing basis in the international system. Realism, neo-realism, liberalism, neo-liberalism, international society theory, international political economy theory as well as various post-positivist alternatives reflected in critical theory, post-modernism, constructivism and normative theory represent some of the major paradigms that have been employed in this regard. Against the background of this welter of options, the present study is informed by ‘an international society’ theoretical perspective which in effect combines the best elements of a number of other paradigms, including realism and liberalism. The eclecticism reflected in the approach thus provides the necessary analytical flexibility to deal with the multifaced and complex issues involved in the multilateral negotiations on the NIEO. The author has had the good fortune and privilege of participating, both within the forums of the UN system and in meetings of the developing countries, in the discussions on the complex of issues relating to the new international economic order. This imposes a special obligation to present the case of the developing countries for a new order, if only to place on record the point of view of the developing countries which, as mentioned earlier, has been inadequately represented in the literature on the subject. Although the study will focus mainly on the efforts of the developing countries in the quest to establish the new order, every attempt will, of course, be made to respect the objectivity which must characterise any serious study of this nature. In compiling this record of events which occurred in the period under review (1974-1984), I owe a debt of gratitude to my erstwhile colleagues in the Non-Aligned Movement and in the Group of 77 with whom I have discussed these issues during long hours, not always with complete agreement, but always with a common commitment to the struggle for the establishment of a just and equitable international economic order. My intellectual encounters with representatives of the developed countries – many of whom have become my friends - have taught me to appreciate their point of view, even though I have often disagreed with them. Finally, I would like to express my appreciation to the librarians at the Dag Hammarskjold Library of the United Nations and the

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Library of the University of the West Indies at Mona, Jamaica, for providing documentation without which this study would not have been possible. The study is dedicated primarily to the peoples of the developing world who constitute the majority of the world’s population, many of whom, in the writer’s view, are the victims of ‘unnecessary poverty’ in the midst of a world of plenty which possesses the economic and technological capacity to ensure that all men and women live in dignity and decency. May 1, 2003

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Acronyms and Abbreviations ACABQ ACC ACP APEC BADEA CARICOM CIEC CFF CMEA CPC DPU DTCD ECDC ECLAC ECOSOC EEC ERP ESCAP EU FAO GATT GSP GSTP IAEA IBRD IDA IDS IEA IFAD ILO IMF MME MSA MTNs NGO NIEO

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Advisory Committee on Administrative and Budgetary Questions Administrative Committee on Coordination Africa, Caribbean and the Pacific Action Programme for Economic Cooperation Arab Bank for Economic Development in Africa Caribbean Community Conference on International Economic Cooperation Compensatory Financing Facility Council for Mutual Economic Assistance Committee for Programme and Coordination Developing Countries Payment Union Department of Technical Cooperation for Development Economic Cooperation Among Developing Countries Economic Commission for Latin America and the Caribbean Economic and Social Council European Economic Community European Recovery Programme Economic and Social Commission for Asia and the Pacific European Union Food and Agriculture Organisation General Agreement on Tariffs and Trade Generalised System of Preferences Global System of Trade Preferences International Atomic Energy Agency International Bank for Reconstruction and Development (World Bank) International Development Association International Development Strategy International Energy Agency International Fund for Agricultural Development International Labour Organisation International Monetary Fund Multilateral Marketing Enterprise Most Seriously Affected Multilateral Trade Negotiations Non-Governmental Organisation New International Economic Order

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ODA OECD OPEC PLO SDRs SELA STO SWAPO TTI UNCTAD UNDP UNEP UNIDO UNITAR WHO WTO

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Official Development Assistance Organisation for Economic Cooperation and Development Organisation for Petroleum Exporting Countries Palestinian Liberation Organisation Special Drawing Rights Latin American Economic System State Trading Organisation South-West Africa People’s Organisation Trade, Transport and Industry United Nations Conference on Trade and Development United Nations Development Programme United Nations Environment Programme United Nations Industrial Development Organisation United Nations Institute for Training and Research World Health Organisation World Trade Organisation

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Actors In The International Economic System

-1THE DEVELOPING COUNTRIES AS Actors in the International Economic System

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he emergence of developing countries as significant actors in the international economic system was essentially a product of the process of decolonisation1 which set the stage for the creation of new independent states and their accession to membership of the United Nations as sovereign entities. As colonies, developing countries were linked in a vertical relationship to the dominant metropolitan centres with the result that there was very little contact among them. Political independence was, therefore, a necessary precondition for the establishment of effective political and economic links between these countries which in turn provided the basis for the development of joint strategies and action on their part, based on the perception of common needs and interests. One of the earliest post-independence gatherings among developing countries was the Asian-African Conference (the so-called Bandung Conference) convened in Bandung, Indonesia, April 18 to 24, 1955, on the invitation of the Prime Ministers of Burma (now Myanmar), Ceylon (now Sri Lanka), India, Indonesia, and Pakistan. The Conference, in which twenty-nine countries2 participated, adopted an essentially anti-imperialistic stance. It expressed support for, among other things, the principle of self determination of peoples and nations as set forth in the Charter of the United Nations and also urged closer economic cooperation among developing countries. It should be pointed out, however, that fear among some developing countries of the growing influence and dominance of China, coupled with the outbreak of hostilities between India and China in 1962, led to the exclusion of China from subsequent gatherings of the developing countries and thus altered the definition of the developing world and indeed the composition of the Non-Aligned Movement which emerged in the wake of Bandung.

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The Non-Aligned Movement Although an incipient philosophy of non-alignment had begun to be articulated during the late 1950s and early 1960s by countries such as India, Indonesia, Egypt, Ghana and Yugoslavia, the origins of non-alignment can be traced back to the Summit Meeting of Non-Aligned Countries held in Belgrade in September 1961 at the invitation of President Tito, following consultations with Prime Minister Nehru of India, President Nasser of Egypt and President Sukarno of Indonesia. The Belgrade Summit3 which was held September 1 to 6, 1961, expressed support for the principle of self determination; the immediate and unconditional elimination of colonisation; respect for the territorial integrity of all states; peaceful coexistence; non-interference in the internal affairs of states; the right to pursue an independent policy; the control by states of their natural resources; and increased economic cooperation among developing countries. On the other hand, the Conference expressed opposition to the existence of foreign military bases as a violation of national sovereignty and pointed to the threat to international peace and security posed by the Cold War. In addition, it urged efforts to promote disarmament and called for the convening of a conference on the subject under the auspices of the United Nations. Finally, the non-aligned countries proclaimed their intention to serve as a positive force for promoting international peace and development. The Belgrade Conference articulated a number of principles that were to become an integral part of the philosophy of non-alignment. It was clear that it also reflected the spirit and influence of the earlier Bandung Conference, even though the definition of the developing world had undergone some changes since 1956. The advent of the Non-Aligned Movement succeeded in altering the traditional bipolar structure of international relations which was based on an East-West ideological division of the world which had developed in the aftermath of the Second World War. Instead, it created a multipolar structure at the diplomatic level, even if significant elements of bipolarity continued to exist at the strategic level. By focusing on the development issue, the Movement also succeeded in adding a North-South dimension to the global equation. Moreover, both within and outside of the United Nations, the non-aligned countries sought to use their increasing numerical strength to promote initiatives independent of the two super-powers namely, the USA and the former Soviet Union. These developments combined to effect a fundamental alteration in the structure of international relations.

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In the three decades following the Belgrade Conference, the Non-Aligned Movement convened six Summits in Cairo (1964), Lusaka (1970), Algiers (1973), Colombo (1976), Havana (1979) and New Delhi (1983). During the same period, several meetings of Foreign Ministers of the Movement were held. In addition, the Movement instituted a number of organisational arrangements to carry out its work in the intervals between the meetings of Foreign Ministers and the summit meetings. For example, a Coordinating Bureau met periodically to provide guidance on both political and economic issues. Similarly, the Coordinators of the Action Programme for Economic Cooperation Among Developing Countries met, as required, to promote activities in the various sectors of the Action Programme. During the 1960s, the Non-Aligned Movement not only played an important role in accelerating the pace of decolonisation, but also supported a number of initiatives aimed at promoting the economic development of developing countries. In this regard, the Movement sought to reorient the UN system increasingly towards the goal of development. In so doing, it laid the basis for the emergence of the Group of 77, which later became the main instrument of the developing countries for advancing common positions on economic issues, particularly in the context of the work of the United Nations.

The Group of 77 Against the background of the growing preoccupation with the development issue, the UN General Assembly adopted in December 1961 Resolution 1707 (XVI) on International Trade as the Primary Instrument for Economic Development which, among other things, requested the SecretaryGeneral to carry out consultations among member states regarding the convening of an international conference on trade and development. The resolution clearly reflected the influence and assumptions of the analytical work carried out by the Economic Commission for Latin America (ECLA) under the leadership of its Executive Secretary, Raúl Prebisch,4 which saw trade as a primary instrument of growth and therefore urged increased access to the markets of the developed countries for the primary commodities and manufactures of the developing countries. Following the endorsement of the proposal for the conference by the Conference on the Problems of Economic Development5 held in Cairo in July 1962, the General Assembly decided at its Seventeenth Session held in 1962 to convene the first UN Conference on Trade and Development.6 During the course of the work of the Preparatory Committee on the Conference, the developing countries issued a ‘Joint Statement’ which outlined

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their position on the issues before the Conference. The statement was subsequently presented to the Eighteenth Session of the General Assembly as a ‘Joint Declaration’ on behalf of the developing countries in United Nations.7 The experience of UNCTAD I, which was held in Geneva from March 23 to June 16, 1964, served to reinforce the fact that the developing countries represented a separate group with distinct economic interests from those of the developed countries. At the end of the Conference, the developing countries adopted a ‘Joint Declaration’8 which, among other things, emphasised the importance of maintaining their unity and solidarity in future negotiations with the developed countries. This Declaration may be said to mark the real beginning of the Group of 779 as a separate and identifiable entity in the international economic system. UNCTAD became a main focus of its activities during the early years but, as will be seen, the Group succeeded in establishing itself in all the major centres of multilateral diplomacy.

Composition of the Group of 77 Starting with 77 members in 1964, the Group of 77 witnessed continued growth in its membership during the 1960s and 1970s as the remaining colonies proceeded to independence and acceded to membership of the Group. By 1984, the membership of the Group had increased to 123. All the members of the Group were developing countries with the exception of the Palestinian Liberation Organisation (PLO) which was the only non-state member. Although there was no common or uniform definition of underdevelopment, the Group of 77 was generally seen as comprising countries which ‘by and large’, exhibited a relatively low level of per capita GNP, a dependence on primary commodity production, the absence of, or inadequate, inter-sectoral linkages, and a comparatively low level of technological development10 which were often manifested in significant levels of poverty. In terms of geographical coverage, the Group included countries mainly in Africa, Asia and Latin America and the Caribbean with a smaller number from Europe, namely Yugoslavia, Cyprus, Malta and Romania. The membership of Malta and Romania was in fact of more recent vintage since these countries were admitted only in 1976 at the decision of the Third Ministerial Meeting of the Group held in Manila during that year. In doing so, the Group elaborated specific criteria for membership which stipulated, among other things, that the countries concerned should agree to participate in the work of the Group in all forums; should not seek elective office; and should channel their initiatives through one of the regional groups and obtain its endorsement. Malta

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participated as a member of the Asian Group while Romania participated in Geneva and Vienna through the Latin American Group and in New York directly in the Group of 77. The Group of 77, therefore, embraced a wide range of developing countries differentiated on the basis of such criteria as per capita GNP, population, geographical size, level of natural resource endowment and other physical characteristics. Some, such as Brazil and India, are large both in terms of population and geographical size, while others such as St Kitts and Nevis and St Vincent and the Grenadines, are extremely small. Some are richly endowed with natural resources, others are without any significant resource base. Some are island developing countries, others are land-locked, still others are categorised as least developed, or, as was the case during the 1973 energy crisis, as most seriously affected countries. In addition, the Group also accommodated a wide range of ideological tendencies – from radical socialist such as Cuba to conservative such as Saudi Arabia. In spite of its heterogeneity and the inherent difficulties involved in reconciling such a large number of views, the Group displayed a remarkable unity, based on the perception of common needs and interests, that has been one of its major strengths.

Structure and Organisation of the Group of 77 During the period covered by the study, the Group of 77 was divided into three basic regional groupings, namely, Africa, Asia and Latin America and the Caribbean. These sub-groups met separately, particularly within the framework of activities of UNCTAD, to work out their position on issues. The positions of the various groups were then discussed and reconciled within the Group of 77 in order to arrive at a common position. Usually, the decisions of the Group, which were based on consensus, involved compromises as well as interest aggregation and were designed to reflect the combined interests of the different groups brought together on a common platform. There were, of course, certain differences among the groups which gave rise to debate and controversy. The countries comprising the Latin American Group were, by and large, more developed than the countries of Africa and some parts of Asia. For this reason, the Latin American Group, given the superior manufacturing capacity of its member states, was generally interested in access to the markets of the developed countries for manufactures as well as access to technology and loans. Africa and some Asian countries, on the other hand, had an interest in the improvement and stabilisation of the price of primary commodities on which they were heavily dependent, as well as in increased aid flows in support of their development.

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It is worth noting that, although the Caribbean countries belonged to the Latin American Group, given the similarities of their economic structures to many of the African countries, their interests tended to coincide more often with those countries than with the countries of the Latin American Group. For example, on the question of access to the markets of the developed countries, the African, Caribbean and Pacific (ACP) countries were often pitted against the Latin American countries in defending the special trading privileges and preferences which they enjoyed under the Lomé Convention, and which the Latin American countries saw as discriminating against them. The ACP countries argued, however, that their comparatively low level of economic development, heavy dependence on the EU market and their inability to compete on an equal basis with the more developed Latin American countries justified such preferential access. Another issue which provoked controversy within the Group was the competing demands of the various special categories of countries such as least developed, land-locked and island developing countries. The elaboration of these categories was seen by some of the more developed countries of the Group as potentially divisive by possibly creating competing needs and interests. Moreover, the Latin American countries frequently expressed their concern that this development could lead to a policy of graduation whereby the ‘more developed’ developing countries could be excluded from a number of benefits conferred on developing countries by the international community. The less privileged developing countries felt, nevertheless, that the acknowledgement of such differences within the Group of 77 was critical to the preservation of its unity. It is perhaps true to say that, partly as a result of these concerns, there emerged a tendency within the UNCTAD framework to place excessive emphasis on meetings of the regional groups, often at the expense of the interests of the wider Group of 77. Understandably, the tendency to emphasise the primacy of regional group meetings indicated a desire, particularly on the part of the Latin American Group, to ensure that the interests of the regional groups were adequately represented in the negotiations undertaken by the Group of 77 with the developed countries. Nevertheless, this tendency at times hampered the overall effectiveness of the Group. The Group of 77, which was organised in the major centres of multilateral diplomacy, namely, New York, Geneva, Vienna, Rome, Paris and Washington, represented at a broad conceptual level the embodiment of the will of the developing countries, but at the same time remained a loose alliance committed to the promotion of the economic interests of its members. However, despite its loose structure and the absence of rigidly defined principles of organisation,

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the Group succeeded over the years in elaborating an organisational structure and decision making procedures that enabled it to pursue its objectives with a fair degree of effectiveness. At the highest level, 11 the Group met in ministerial sessions prior to each session of UNCTAD, to agree on a platform for negotiations with the developed countries. Between 1964 and 1984, the Group held ministerial sessions on this basis in Algiers (1967), Lima (1971) Manila (1976) Arusha (1979) and Buenos Aires (1983). Apart from the ministerial meetings of the Group which took place during various international conferences, the Group also held ministerial meetings in preparation for the UNIDO General Conferences. Similarly, the Group of 24, which was seen as the Washington chapter of the Group of 77 on monetary and financial matters, held a large number of meetings at the ministerial level. Moreover, beginning in 1977, the Group of 77 adopted the practice of convening a meeting of Foreign Ministers during the early weeks of the UN General Assembly. It also became conventional for this meeting to announce the election of the new Coordinator or Chairman of the Group in New York to serve in that capacity until the end of the following year. In terms of the actual organisation of the regular ministerial sessions of the Group in preparation for UNCTAD, negotiating groups were established on various agenda items or groups of items to be discussed at the Conference. These Groups were chaired by the representatives of the various regional groups elected on the basis of equitable geographical distribution, although the choice of the particular country to provide the chairperson of a specific committee was generally determined on the basis of the competence and suitability of its representative. Outside of the ministerial meetings, the activities of the Group of 77 in New York revolved around the work of the Second Committee12 of the UN General Assembly, during both its regular and special sessions. Because of the overall political context in which the New York-based Group operated, it became heavily politicised. Moreover, the increasing preoccupation of the General Assembly with economic issues – beginning with the Sixth Special Session in 1974 – and the development of the practice of holding annual meetings of Ministers of Foreign Affairs, contributed to the increasing ascendancy of the New York Group vis-à-vis its counterparts in Geneva, Vienna, Rome, Paris and Washington. With its growing importance over the years, the Group succeeded in introducing an impressive range of working arrangements which merit comment. As mentioned earlier, the Group elected its Coordinator annually at the beginning of each regular session of the UN General Assembly. The Coordinator, who would normally be the Permanent Representative13 of his/her country to

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the United Nations in New York, assumed responsibility for the organisation of the work of the Group and was assisted in this task by other members of his or her delegation who sometimes also chaired meetings of the Group. Normally, the Group would meet before the General Assembly to draft resolutions on various agenda items which would then be adopted by the Group as a basis for negotiations with the developed countries. During the 1970s, the Group of 77 in New York established the so-called Group of 2714 which comprised a smaller group of delegations for the purpose of drafting resolutions on specific agenda items as well as other general Group positions for subsequent consideration and adoption by the larger Group of 77. This Group, which was normally chaired by the Coordinator of the Group of 77, was ‘open-ended’ in the sense that any other member country of the Group could participate in its work. Nevertheless, the Group of 27 bore the brunt of the responsibility for formulating the Group of 77 positions. Given the wide range of issues with which it dealt, the Group of 77 met frequently and often in lengthy sessions. With the introduction of this arrangement, the tendency also developed for selected members of the Group of 27 to assume responsibility for carrying out the negotiations with the developed countries on the draft resolutions endorsed by the Group of 77. In practice, however, specific spokespersons were designated by the Coordinator of the Group from among the membership of the Group of 77 as a whole, based on the expertise within the Group on various subjects or the interest of the country from which the spokesperson was selected in the particular subject or agenda item. The members of the wider Group of 77, however, retained ultimate responsibility for the resolutions adopted by the Group. Consequently, the Coordinator convened the full membership of the Group of 77 on a fairly regular basis for the purpose of endorsing drafts prepared by the Group of 27 and individual delegations or to resolve negotiating difficulties. While the membership of individual countries in the Group of 77 remained constant, the participation of individuals representing the countries was of necessity subject to constant change as representatives were recalled to their capitals or rotated to other diplomatic missions abroad. This fact was not unimportant since the prestige and influence of a country within the Group was often determined by the effectiveness of individual representatives rather than by the policy of the country itself, although the latter was, obviously important. During the period 1974–84, and particularly beginning with the Sixth Special Session, the representatives of Algeria, Argentina, Bangladesh, Brazil, Guyana, India, Iran, Jamaica, Madagascar, Mexico, Nigeria, Pakistan, the Philippines, Tunisia, Upper Volta (now Burkina Faso), Venezuela and

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Yugoslavia among others, played at various times a leading role in determining the policy of the Group, and generally, in influencing its work. Contrary to the view that was sometimes propagated, the Group of 77 was able to find competent spokespersons to promote and defend its position. They often proved equal, if not superior, in skill, finesse and eloquence to the representatives of the developed countries. If change has not been brought about in the international economic system as a result of the several negotiations, it was not due to any inadequacies on the part of the spokespersons of the developing countries or any superior abilities on the part of representatives of the developed countries, but rather to the unwillingness of the latter to concede fundamental change in the existing system and their power to sustain this stance. Be that as it may, many felt that the Group of 77 would have been better served by the establishment of a secretariat, bearing in mind that the developed countries had established the OECD Secretariat. It was argued that the creation of a technical secretariat could provide a greater degree of continuity and support to the Group of 77, given the comparatively frequent change of representatives of developing countries in New York and the fact that Permanent Missions of the developing countries were generally not as wellstaffed as those of the developed countries. For this reason, the Fourth Ministerial Meeting of the Group of 77 held in Arusha in February 1979 agreed to appoint a working group to examine the feasibility of establishing a technical support group. In pursuance of this decision several meetings of the working group were held in Geneva to discuss the question. However, despite these meetings and specific consideration of the question by the meeting of the Ministers of Foreign Affairs of the Group of 77 held in New York in 1979, the Group was unable to arrive at a definitive position on the issue. It was clear that while many countries saw the value of a technical support machinery, others were reluctant to support the idea because of their fear of being locked too rigidly into a Third World secretariat. As a partial compromise, the high-level Conference of the Group of 77 on ECDC held in Caracas in May 1981 agreed to provide a small core of assistants to support the Chairman of the Group in New York on ECDC matters. Accommodation was provided for the ‘core group’ in the offices of the Group of 77 located in the UN Secretariat building. The establishment of a formal full-fledged secretariat would have represented an important step in the continuing evolution of the Group of 77 and would have served to strengthen its effectiveness in the negotiations on the NIEO. However, the Group was clearly unable to arrive at a consensus on the subject.

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Relationship between the Group of 77 and the NonAligned Movement Although the Group of 77 represented the most comprehensive grouping of developing countries and tended to be the primary forum for promoting the economic interests of developing countries, the Non-Aligned Movement also played an important role in formulating the platform on economic issues. It is, therefore, important to examine the nature of the relationship between the Group of 77 and the Non-Aligned Movement. As previously pointed out, although the Non-Aligned Movement in the early stages of its evolution had a primary political orientation which focused on decolonisation and the maintenance of the independence of the developing countries, it demonstrated from its very inception an active concern with economic development, which was seen as an indispensable basis for the effective exercise of political sovereignty. Consequently, all Non-Aligned meetings – whether at the level of the Coordinating Bureau, the Foreign Ministers or the Summit – addressed economic issues and formulated, over the years economic policies and programmes which were generally embraced by the wider Group of 77 in which the Non-Aligned countries constituted a majority. Perhaps the most notable contribution made by the Non-Aligned Movement has been its articulation of a philosophy of collective self-reliance and the formulation of an action programme of economic cooperation among developing countries. As will be argued later, this programme had considerable potential to serve as a basis for effecting fundamental changes in the traditional structure of the international economy. Because of its close relationship to the Group of 77, the Non-Aligned Movement sought, over the year to define the precise nature of the relationship between itself and the Group of 77 in the pursuit of economic objectives. Bearing in mind its more radical perspective and the importance of the initiatives it had adopted over the years, the Non-Aligned Movement continued to maintain its separate identity in the formulation of economic policy. However, for the purpose of negotiations with the developed countries, the Movement always worked within the wider Group of 77 in which it sought to serve as a ‘catalyst’. For all practical purposes, therefore, the position of the Non-Aligned Movement on economic issues was subsumed within that of the Group of 77, even though the Non-Aligned countries maintained the right to advance, at their own meetings, initiatives on economic issues and to seek to promote their adoption by the wider Group of 77.

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It is clear that, by the beginning of the 1970s, the developing countries, both within the framework of Non-Aligned Movement and the Group of 77, had emerged as major actors in the international economic system and demonstrated considerable potential to influence the creation of a new structure of international relations. Indeed, during the 1970s the North-South dialogue on international economic issues was elevated by the developing countries to a position of equality with the traditional political concerns about international peace and security. Given the prevalence of poverty and underdevelopment, the developing countries felt compelled to insist that the discussion of economic issues should occupy a central place on the international agenda.

NOTES 1.

2.

3.

4.

5. 6. 7. 8. 9.

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The process may be said to have begun with the independence of a number of Arab States during the period between the two World Wars, followed later by the independence of India in 1947 and Ghana in 1957. The Conference was attended by representatives from the following countries: Afghanistan, Burma (Myanmar), Cambodia, Ceylon (Sri Lanka), People’s Republic of China, Egypt, Ethiopia, Ghana, India, Indonesia, Iran, Iraq, Japan, Jordan, Laos, Lebanon, Liberia, Libya, Nepal, Pakistan, Philippines, Saudi Arabia, Sudan, Syria, Thailand, Turkey, The Democratic Republic of Vietnam, the State of Vietnam and Yemen. The participating countries were Afghanistan, Algeria, Burma (Myanmar), Cambodia, Ceylon, Congo, Cuba, Cyprus, Ethiopia, Ghana, Guinea, India, Indonesia, Iraq, Lebanon, Mali, Morocco, Nepal, Saudi Arabia, Somalia, Sudan, Tunisia, United Arab Republic (Egypt), Yemen and Yugoslavia. Bolivia, Brazil and Ecuador attended as Observers. Raúl Prebisch subsequently became the first Secretary-General of UNCTAD following the establishment of the organisation in 1964 and thus exercised an important influence on its development during the 1960s. The Conference was attended by 31 developing countries. Five others attended as Observers. See Resolution 1785 (XVII) of December 8, 1962. In 1963, 75 developing countries were members of the United Nations. The so-called ‘Joint Declaration of the Seventy-Seven’ was adopted on June 15, 1964, the day before the formal closure of UNCTAD I. Although the membership of the Group of 77 had expanded beyond the original 77 members at the time of UNCTAD I, the Group retained its original name. At the present time the, Group comprises 132 countries and it has become the convention to refer to the ‘Group of 77 and China’ to indicate the close links forged between the two in the area of multilateral diplomacy. Other socio-economic indicators such as life expectancy, literacy and the ratio of doctors and teachers to the total population, have also been used as a measure of underdevelopment.

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11.

12. 13. 14.

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During the period covered by the study, the ministerial meeting of the Group represented the highest level of decision making within the Group. The first G77 Summit was held in Havana, Cuba in April 2000. The Second Committee deals with economic and financial issues. Of course, the Foreign Minister or other ministerial representative of the country elected as Coordinator could also chair meetings of the Group. The appointment of this Group in preparation for the Seventh Special Session of the General Assembly was influenced by the experience during the Sixth Special Session during which the Group of 77 had appointed a similar Group of 30.

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-2Evolution and Structure of the International Economic System

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he demand for a New International Economic Order cannot be understood without reference to the origin, structure and operation of the international economic system, particularly in terms of its impact upon the economies of developing countries.

Colonial Beginings The international economic system has well-known historical antecedents and is, in fact, a product of modern colonialism and imperialist expansion in the era of an emergent capitalism. While it is true that the history of international economic relations can be traced back to the early contacts established between nations in the period of antiquity, the development of a truly global system, integrating most of the countries and territories of the world, was the direct consequence of European conquest and colonisation in Latin America and the Caribbean, Asia and Africa. In the case of Latin America and the Caribbean, the process of incorporation into the international economic system started fitfully, with the establishment of Spanish colonies in the wake of the so-called discovery of the New World by Columbus in 1492 and the wholesale repatriation of gold and silver to Spain in the aftermath of the conquests of Cortés and Pizarro in Mexico and Peru, respectively, during the sixteenth century. In the Caribbean, European penetration took the form mainly of the establishment of Spanish, French, British and Dutch colonies, which after the middle of the seventeenth century became the ‘locus classicus’ of the plantation utilising slave labour for the production of sugar for export to the European market. During the course of the seventeenth and eighteenth centuries, these colonies, which became an

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integral part of the ‘triangular trade’ linking Europe, Africa and the New World, made a critical contribution to the capital formation which was used to finance the Industrial Revolution in Britain.1 Colonial domination during the seventeenth and eighteenth centuries was underpinned by the philosophy of mercantilism which rationalised the subordination of the trade and production of the colonies for the benefit of the metropolitan countries as was characterised by the passage of the Navigation Acts2 in the British colonies and the establishment of the ‘Exclusive’ in the French colonies. The model of colonial administration and control, which was elaborated in the Caribbean was subsequently extended to Asia, most notably with the British conquest of India, whose vast wealth was exploited for the benefit of the mother-country and whose trade and production were systematically subordinated to the interests of the metropole, as was illustrated by the destruction of the Indian textile industry in order to accommodate the output of Liverpool and Manchester. Having succeeded in harnessing the wealth derived from the colonies in the Caribbean and India for the needs of industrial production, Britain, which was in the forefront of the Industrial Revolution, proceeded, during the course of the nineteenth century, to dismantle the props of mercantilism through the abolition of the slave trade in 1807, the termination of the trading monopoly of the East India company in 1813, the equalisation of sugar duties in 1846 and the repeal of the Corn Laws in the same year. Thereafter, Britain became the foremost advocate of free trade through which it sought to make the entire world its market-place. The competition among the European colonial powers which developed in the wake of ‘free trade imperialism’3 was to lead to the infamous ‘Scramble for Africa’ towards the end of the nineteenth century during which the continent was systematically parcelled out among the European powers, thus leading to its incorporation into the international capitalist system. As far as the developed countries are concerned, the period of colonial expansion between 1870 and 1945 was marked by three major developments. Firstly, Canada and the newly established white settlements, the so-called dominions of Australia and New Zealand, were major beneficiaries of British investment, financed from the proceeds of colonial exploitation. It is estimated that between 1865 and 1914 these countries together with the United States received 45 per cent of British investment.4 What is significant is that these investments – unlike those in the developing countries which were directed at primary commodity production – were used to increase manufacturing output and generally to improve the economic well-being of the recipient countries. Secondly, the period witnessed important changes in the relative economic

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positions of the colonial powers. Britain, which had been the leading industrial power, was overtaken by the US in 1870 and also by West Germany in 1900. Finally, with the acquisition in 1898 of the Philippines, Guam and Puerto Rico, through cession from Spain, and the annexation of Hawaii during the same year, the US emerged as a major colonial power. It should be pointed out that the global system of colonial domination that had been established was a complex structure which had significant political, economic, social and cultural implications for the people of the developing world. However, without ignoring the importance of all of these dimensions, this study will focus on the specific economic consequences of the nature of the relationship forged between the developed countries and the developing countries. Writers such as Jalée,5 Magdoff,6 Baran and Sweezy,7 Frank,8 Amin,9 Nabudere10 and Stavrianos,11 among others, have provided competent analyses of the impact of colonisation and imperialism on the economic fortunes of the developing countries. For the purpose of this study a number of those consequences bears reviewing.

Subordinated Integration The most important consequence of European penetration of the developing world was the integration of the developing countries into an economic structure that was dominated and controlled by the developed countries. Because economic power and control were located in the metropolitan centres and because of the specific form of integration of the developing countries, the economic system was characterised by a marked degree of dependence of the developing countries. Moreover, the system produced a predominance of vertical links in the international economy with a comparative absence of horizontal contacts among the developing countries themselves. It is this reality that produced the North-South dichotomy in the international economic system. Within the developing countries, the phenomenon of external penetration resulted in a significant distortion of the structure of their economies by orienting production and trade to the needs of the metropolitan countries rather than to the internal needs of the colonised societies. This occurred both in situations where colonialism created the initial structure of production, as in the case of the Caribbean countries, and in those situations where it systematically destroyed aspects of the pre-existent indigenous production structure, such as in India.

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This distortion of the economic structure of the developing countries expressed itself in two main forms. Firstly, economic activity in these countries was confined mainly to the production of a limited range of primary commodities required by the metropolitan economies. This production orientation was systematically enforced by colonial policy which actively discouraged any diversification of the economic structure of the colonial societies. The second major effect was the orientation of production to external markets which in turn created a major dependence on such markets, thus reinforcing the vulnerability of the colonial economies. It is for this reason, that during the 1970s and 1980s, access to the markets of the developed countries became such a major preoccupation of the developing countries, as evidenced by the conclusion in 1975 of the Lomé Convention between the Africa, Caribbean and Pacific (ACP) countries and the European Economic Community (EEC) (now European Union) and by the continuing debates which took place within the framework of UNCTAD on the need to eliminate or reduce tariff and non-tariff barriers to the exports of developing countries. Also, because of this structure of trade and production, prosperity in developing countries became closely linked to and dependent on prosperity in developed countries. This condition persisted in the absence of significant changes in the basic structure of trade and production in the developing countries. The net effect of this situation was that developing countries developed artificial economies which responded to external rather than internal stimuli and thus exhibited an undue degree of openness or what Samir Amin has called ‘extraversion’.12 Closely allied to this reality was the systematic exploitation of the mineral and agricultural resources of the developing countries that had taken place over the years. It is a well-documented historical fact that the gold and silver extracted from New World societies such as Mexico and Peru during the era of colonialism contributed significantly to capital accumulation in Europe via Spain. Similarly, the profits realised from slave grown sugar in the Caribbean during the seventeenth and eighteenth centuries were a major source of the capital which financed the first Industrial Revolution in Britain. A similar pattern of exploitation was evident in many countries in Asia, particularly India, and in Africa. This pattern of relations, which over time assumed new and more sophisticated forms, placed at the disposal of the developed countries a vast array of natural resources, such as oil, bauxite, tin, lead, copper and rubber, which served as critical inputs in the industrial development process that was at the heart of their economic prosperity.13 A third consequence of this pattern of incorporation of the developing countries was the development of a situation of unequal exchange14 between

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the developed and the developing countries. The origin of ‘unequal exchange’ lies in the historical division of labour between the developed and developing countries imposed by the former by which the latter were relegated to the role of providers of raw materials and as markets for the manufactured products of the developed countries. It was a division of labour which was initially fashioned by the logic of colonial domination but was subsequently rationalised by the theory of comparative advantage, first articulated by the British economist, David Ricardo, during the nineteenth century. It was in the nature of this division of labour that the commodities produced by the developing countries were exported to the developed countries largely in unprocessed form. Not only did this mean that demand for these commodities was dictated by factors in the developed countries, thus enabling the latter to determine their price – except perhaps in the special case of petroleum – but also that the value-added realised in the processing of these commodities into manufactured products accrued largely to the developed countries. This was particularly evident in the case of a commodity such as bauxite in which the value-added quadrupled 15 at each stage of production, that is, in the transformation of bauxite into alumina and, ultimately, into aluminium – a situation in which the latter two processes were located largely in the developed countries. In fact, it was estimated that although the commodities produced by the developing countries in 1976 generated over $200 billion in final products, these countries obtained less than $30 billion of that amount.16 In spite of these statistics, some writers have sought to emphasise the fact that developing countries play a much less significant role in world trade than developed countries. But while it is true that in 1974, for example, the developing countries accounted for 17.5 per cent of the total value of world trade compared with 71.4 per cent for the developed market-economy countries, this bald comparison considerably underestimated the real hidden value of the unprocessed products of the developing countries. It would have been fairer to determine the value of the end products deriving from the basic raw materials produced by the developing countries in order to understand their real contribution to international trade and development. Moreover, because of the reverse dependence of the developing countries on the manufactured products of the developed countries, the former countries were less able to influence the price of such imports. What resulted, therefore, was a situation in which the developed countries controlled the price not only of their own exports but also the primary commodities they imported. It is this phenomenon that was at the heart of the terms of trade problem of the developing countries, which became such a major issue of contention between the developed and developing countries in the debate on the restructuring of the international economic system.

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It is clear that the pattern of international relations which had evolved since the seventeenth century resulted in a marked imbalance between the economic situation of the developing countries vis-à-vis that of the developed countries. As Chaliand pointed out in 1977: Underdevelopment is not an internal phenomenon due to the set of structures of the Third World countries but a product of the world capitalist system and an integral part of it. There can be no way of overcoming it except by putting an end to dependence itself and to the structure of dependent relationship.17 It was a situation dictated by the political control and domination exercised by a number of developed countries over vast areas of the developing world for over three centuries.

The Bretton Woods Institutions Prior to the Second World War, the superordinate/ subordinate relationship between the developed and developing countries was preserved by the unquestioned political domination of the former. However, following the Second World War, an attempt was made to introduce a more orderly and rational system of international economic management. The International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD) (the World Bank) which were established in 1944 were conceived as the instruments to serve this purpose. The creation of these institutions was premised on the need to construct an international economic system based essentially on the principles of laissezfaire. The main function of the IMF was to provide short-term loans designed to correct the balance of payments problems of individual countries, subject to the acceptance by the borrowing countries of certain conditions which, particularly in the case of the developing countries, normally required, among other things, the reduction of government expenditure and bank credit; the devaluation of national currencies vis-à-vis the US dollar; the elimination of exchange control on foreign exchange transactions and the encouragement of foreign investment as a means of stimulating economic growth and development. The economic implications of this type of IMF conditionality for growth and employment in the developing countries have been welldocumented. The World Bank, on the other hand, provided longer term loans at commercial rates of interest to finance capital development projects designed to stimulate post-war economic recovery. The Bretton Woods system was

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complemented in the immediate post-war period by the European Recovery Programme (ERP), also known as the Marshall Plan, which was designed to stimulate war-torn Europe economic recovery in order to enable it to participate in the newly-created system of international economic cooperation. The structure created at Bretton Woods reflected a large degree of consensus among the developed countries on the objectives of international economic management. However, it clearly accorded a dominant position to the United States, which was reflected in the prominent role of the US dollar as the major reserve currency of the system. Moreover, the system of weighted voting, based on quota allocations, gave the US and its major allies over 85 per cent of the voting power of the Fund and the Bank.18 Needless to say, the formalisation of the previous de facto domination of the developed countries that was implicit in the system did little to improve the subordinate status of the developing countries, many of which were still dependencies of the main architects of the prevailing economic system at the time of its creation. The post-war edifice of international economic relations was completed with the establishment of the General Agreement on Tariffs and Trade (GATT) in 1947, which was eventually accepted as a compromise arrangement following the failure of the US Congress to ratify an agreement on the much more comprehensive International Trade Organisation (ITO) that was embodied in the Havana Charter of 1947. The GATT was intended to provide the framework for a system of free trade based on non-discrimination as embodied in the most favoured nation (MFN) principle and also to serve as a rational framework for the negotiation of tariff reductions.

Transitional Corporations Another significant post-war development was the remarkable expansion of the activities of transnational corporations. According to one calculation, ‘from 1950 to 1966 the number of affiliates of US multinational corporations rose from upwards of 7,000 to more than 23,000’,19 Between 1966 and 1969 the flow of direct investment from Japan, Western Europe and the USA to developing countries increased by 26 per cent, 55 per cent and 23 per cent, respectively.20 It is estimated that by 1980 the value of investment by US firms in developing countries totalled over $52 billion. 21 As Magdoff has remarked, ‘the enshrinement of the US dollar at Bretton Woods provided the financial framework for the great leap forward of its corporate investment abroad’.22 Functioning as successors of the joint stock companies of the seventeenth and eighteenth centuries, such as the British and the Dutch East India Companies,

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these modern corporations were seen by their critics as contributing to the unequal integration of the developing countries in the international economic system. There has been much debate on the real impact of transnational corporations on the economic fortunes of developing countries. It is true that, on the one hand, they were instrumental in promoting the transfer of technology, together with some capital inflows and also generated employment opportunities in the developing countries. On the other hand, the operation of transnational corporations were perceived to have a number of adverse consequences for developing countries. Suffice it to say, that during the 1970s many developing countries were extremely suspicious of the role of such corporations in their economies. Transnational corporations, in fact, emerged as major instruments for tapping the natural resources and labour power of developing countries. The ethic of profit maximisation embodied in the transnational corporation was inherent in the structure of its operation. In spite of its extensive penetration of the economies of developing countries, ultimate power and control resided in the metropolitan countries in which the headquarters of the corporations were located. The developing countries in which they operated tended to be mere loci of an externally directed production process, geared to the exploitation of raw materials, such as bauxite, copper, tin and rubber, and also served as markets for their products. In this latter regard, the corporations, acting either directly or through their subsidiaries, generally succeeded in creating captive markets in the developing countries largely because of the low level of development of these countries and the undiversified nature of their economies. What is significant is that, contrary to general belief, the outside capital invested by transnational corporations in developing countries was, in some cases, comparatively insignificant. Apart from the initial capital outlay by the corporations, a large proportion of subsequent capital formation was derived from the host countries themselves. It is estimated, for example, that ‘between 1957 and 1965, American-based multinationals financed 83 per cent of Latin American investment locally, either from reinvested savings or from Latin American savings’.23 The operation of transnational corporations in developing countries during the 1970s and 1980s, in fact, led to a significant outflow of profits to the developed countries. This was caused not only by the fact that, as stated above, much of the profit was derived from capital formation in the developing countries through the exploitation of cheap labour, but also because of the capital-intensive nature of the investment in the developing countries, which

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meant that the returns to the externally owned capital, were much greater than those accruing to labour – which were usually comparatively insignificant both in terms of the small size of the labour force employed and the cheapness of labour itself. In 1976, earnings on US direct investment in developing countries amounted to $7 billion compared with investment outflows of only $2.8 billion.24 Similarly, in 1981 it was estimated that profits remitted to the US exceeded new investments by $4 billion.25 Both Jalée26 and Amin27 have estimated that the returns on direct investment in the developing countries ranged from 15 to 22 per cent as against 5 to 14 per cent in the developed countries. In fact, Fred Bergsten, a former U.S. Assistant Secretary of the Treasury for International Affairs, put the returns in 1976 on US investments in the developing countries at 25 per cent, which he states was ‘more than twice the rate of return on similar investments in the developed countries’.28 In addition, transnational corporations derived significant returns from licensing fees on technology transfers and royalties paid by subsidiaries operating in the developing countries and from other related services. According to Mathieson, US income from service exports (for example investment income, fees and royalties, shipping and insurance and internal income from developing countries) amounted to over $23 billion in 1980.29 Moreover, the vertically integrated nature of these corporations, which in most cases involved a direct relationship between the parent company and the externally based subsidiaries, facilitated the manipulation of intra-company transfers in the interest of the parent company because of the principle of incalculability. What is ironic is that transnational corporations paid comparatively low rates of royalty on the exploitation of natural resources and, in many cases, benefited from generous operating concessions, including exemptions from taxation and customs duties. Transnational corporations also tended to create enclave-type economic structures which served as obstacles to the structural transformation of the economies of the developing countries in which they operated. More important still, in some cases, corporate investment also distorted economic development in the developing countries by orienting economic activity towards the global interests of the corporations themselves rather than the needs of the local economies. Finally, although the virtues of private investment in promoting development were often extolled, it was sometimes overlooked that much of the capital invested in the developing countries was externally owned and, therefore, led to a substantial outflow of profits. This fact negated the potential multiplier effect of the investment in the local economy. In other words, it is important to recognise the qualitative differences between local and foreign investment in the development process.

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Seen from this perspective, the view held by a number of developing countries during the 1970s was that, while transnational corporations had made some contribution to economic development through the provision of capital, employment generation and the transfer of technology, the adverse impact of the exploitation of natural resources and labour, the repatriation of profits and the overall distortion of the economic structure of the developing countries in the interest of the corporations tended to lessen their contribution to overall development. In fact, transnationals were seen by such critics as a major instrument for the transfer of wealth from the developing countries to the developed countries. The arrangements embodied in the Bretton Woods system, which was created in 1945, served the needs of international economic management, as defined from the perspective of the developed countries, until the 1960s when cracks began to appear in the system. Several factors contributed to this situation. Throughout most of its existence, the system was premised on the economic dominance of the United States which, under the Marshall Plan, had provided the resources for the reconstruction of Europe in the wake of the devastation caused by the Second World War. However, the success with which the US had aided the economic recovery of Europe served to convert these countries, though political and military allies within NATO, into eventual economic rivals. This became particularly evident with the significant increase in industrial production achieved in Western European economies between 1948 and 1952 and also the impressive growth in GNP and exports between 1953 and 1959. By the 1960s, the European Economic Community (now European Union), which was formed in 1957, had emerged as a major economic grouping with considerable potential for further growth. In addition, Japan, which had achieved significant increases in per capita income during the 1950s and an impressive growth in industrial output during the 1960s, also emerged as a formidable competitor of the US, gaining a competitive advantage over the latter in the production of electric equipment and automobiles. By 1970, Japanese products accounted for 15.5 per cent of all the US market. The fact is that both the EEC (European Union) and Japan were able to invest a higher percentage of GNP in infrastructure and production than the US. For example, it is estimated that West Germany as it was then called, spent approximately half and Japan less than one-fifth of the percentage of GNP allocated by the US for expenditure on armaments. Moreover, the involvement in the Vietnam War imposed a heavy burden on the US economy. In 1970, the US registered a major trade deficit.

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The first cracks in the Bretton Woods system were, to some extent, signalled by the economic difficulties which confronted the British economy during the period 1964 to 1968. Britain was forced to resort to a series of devaluations of sterling which sent shock waves throughout the Sterling Bloc area, including the former British colonial territories which had retained membership of the Bloc. However, the most significant indicator of the approaching collapse of the system was the growing uncertainties in the American economy by the beginning of the 1970s. The final collapse of the system was signalled by the so-called Smithsonian devaluation of the US dollar in 1971, marking the end of the system of fixed exchange rates. This was followed by a further devaluation of the dollar in 1973. The situation was further aggravated by the quadrupling of oil prices in 1973 and growing inflationary pressures in the world economy. Consequently, by the early 1970s, the system that was designed specifically to promote international economic stability no longer fulfilled this purpose. Much less could it claim to serve the needs of the developing countries which were never the intended beneficiaries of the system.

Economic GroupingS: North, South and Soviet Bloc In terms of its overall structure, the international economic system which had been shaped by the forces described above, had evolved into what may be described as a tripartite structure comprising countries falling into three separate categories, namely, the industrialised North, the Soviet Bloc and the developing South. The industrialised North, comprising the USA, Canada, Western Europe, Japan, and as well as Australia and New Zealand had achieved significant economic growth and had consolidated their power and influence in organisations such as NATO and OECD and in the EEC (European Union), which was confined to the European members of the group. In ideological opposition to the mainly capitalist North, the socialist-oriented Soviet Bloc had achieved a respectable degree of industrial development and, in the case of the Soviet Union itself exercised some degree of influence in the global system, by virtue of its military might, but were generally beset by a number of structural weaknesses which prevented them from realising an optimum level of development. Cooperation within this bloc was effected through various regional security arrangements and, at the economic level, through COMECON. Finally, the developing South comprised a wide range of developing countries, including those from the Asia and the Pacific region which had substantial pockets of poverty, particularly in the larger and more populous countries such as India and Indonesia. At the same the developing South also included outstanding models of economic progress as in the case of Singapore,

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Hong Kong, the Republic of Korea, and Taiwan (province of China) which had experienced spectacular growth since the 1960s. The oil rich countries of the Middle East, most notably Saudi Arabia, Kuwait and Iraq with relatively undifferentiated economic structures and with largely authoritarian governance arrangements also fell into the category of the developing South, as did Latin America and the Caribbean. Although countries such as Argentina and Venezuela had achieved significant growth during the immediate postwar period, they continued to face a number of major obstacles to their development. And the countries of Africa which, in the case of Sub-Saharan Africa had experienced what may best be described as a state of arrested development characterised by significant levels of underdevelopment and a high incidence of poverty were also part of the developing South. Indeed, the overwhelming majority of least developed countries, designated by the United Nations, were located in Sub-Saharan Africa. As was mentioned earlier, efforts aimed at improved cooperation among the countries of the developing South were carried out mainly within the Non-Aligned Movement and the Group of 77. Based on the dynamics in the relationship between the industrialised North and the developing South, the income disparity between them, which had grown consistently over the years was projected to continue to increase significantly in the future unless a concerted effort was made to change this trend. This was the overall configuration of the international economic system during the early 1970s when the developing countries launched their demand for fundamental structural change in the system in an effort to create the conditions for their economic prosperity and for ensuring the viability of the international economic system as a whole.

NOTES 1. 2. 3.

4.

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For an excellent description of the phenomenon, see Eric Williams, Capitalism and Slavery (New York: Capricorn Books, 1966). The so-called Navigation Acts comprised Acts passed in 1651, 1663, 1673 and 1696. For a discussion on the subject see John Gallagher and Ronald Robinson, ‘The Imperialism of Free Trade’, Economic History Review, 2nd Series, VI: 1 1953, reprinted in Great Britain and the Colonies 1815–1865, edited with an introduction by A.G.L. Shaw, (London: Methuen & Co. Ltd., 1970). L.S. Stavrianos, Global Rift, New York: William Morrow & Co. Inc., 1981, 258. During the period between the 1820s and 1860s, the US itself was a major recipient of foreign investment which, according to Stavrianos, accounted for 25 per cent of domestic investment.

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5.

6. 7. 8. 9. 10. 11. 12. 13.

14.

15.

16. 17.

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Pierre Jalée, The Third World in the World Economy, (New York: Monthly Review Press, 1969), and The Pillage of the Third World, (New York: Monthly Review Press, 1970). Harry Magdoff, Imperialism (From the Colonial Age to the Present), (New York: Monthly Review Press, 1970). P. Baran and P. Sweezy, Monopoly Capital: An Essay on the American Economic and Social Order, (London : Penguin, 1968). André Gunder Frank, Capitalism and Underdevelopment in Latin America, (New York and London: Modern Reader Paperbacks, 1969). Samir Amin, Accumulation on a World Scale, (New York: Monthly Review Press, 1974), and Unequal Development, (New York: Monthly Review Press, 1976). Dan Nabudere, The Political Economy of Imperialism, (London: Zed Press Ltd., 1977). Stavrianos, op. cit. Amin, Accumulation on a World Scale, 22. For a discussion of US dependence on Third World raw materials see, among others, Jalée, The Third World in World Economy, (New York and London: Monthly Review Press, 1969), 37-39 and 79-90; John A. Mathieson, US Trade and the Third World: The American Stakes, Occasional Paper 28, (Iowa, USA: The Stanley Foundation, January 1980); and Michael Tanzer, The Race for Resources: Continuing Struggles Over Minerals and Fuels, (New York and London: Monthly Review Press, 1980). In its more specialised form, the theory of unequal exchange is most closely associated with Arghiri Emmanuel, Unequal Exchange, A Study of the Imperialism of Trade, 1972; and Samir Amin, Accumulation on a World Scale, (New York: Monthly Review Press, 1974) and Unequal Development, (New York Monthly Review Press, 1976). As formulated by Emmanuel, the theory defines ‘unequal exchange’ in terms of wage differentials between the developed and the developing countries for the same level of productivity which cause the developing countries to pay more for their imports and to earn less for their exports. Amin developed and built upon Emmanuel’s theory in developing his concept of ‘unequal specialisation’ which represented a critique of the historical international division of labour based on the theory of comparative advantage. The theories of ‘unequal exchange’ and ‘unequal specialisation’, as formulated by Emmanuel and Amin, have been criticised by Marxist writers such as Nabudere and non-Marxists such as Bettelheim and Samuelson. While it is true that theories cannot be considered a total explanation of underdevelopment, they nevertheless provide important insights into the unequal relationship between the developed and the developing countries. For a competent exposition of the theories of ‘unequal exchange’ and ‘unequal specialisation’, see Anthony Bower, Marxist Theories of Imperialism: A Critical Survey, London: Routeledge and Kegan Paul, 1980. See Tanzer, op. cit. Tanzer states that four tons of bauxite sold for about $20 at 1972 prices produced two tons of alumina which sold for $120. This in turn produced one ton of aluminium valued at $500. RIO Reshaping the International Order, A Report to the Club of Rome. (Jan Tinbergen, Coordinator). (New York: A Signet Book, New American Library, 1977), 38. G. Chaliand, Revolution of the Third World, (New York: Viking Press, 1977), 12.

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18.

19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29.

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Despite some quota adjustments in recent years to accommodate the growing economic importance of the OPEC countries, the US continues to exercise a veritable veto on decision-making in these institutions. For an analysis of the role of the IMF and the World Bank, see Robert Solomon, The International Monetary System 1945–1976 (An Insider’s View), New York: Draper and Row, and Dan Nabudere, op. cit., 148–151. Joan Edelman Spero, The Politics of International Economic Relations, (New York: St. Martin’s Press, 1977,) 91. Nabudere, op. cit.,.203. Mathieson, op. cit., 5. Magdoff, op. cit., 13. Stavrianos, op. cit., 447. Stavrianos, ibid., 449. See ‘Third World Puts Out Welcome Mat for Foreign Investment’ in South, The Third World Magazine, January 1983, 55–57. Jalée, The Pillage of the Third World, 113. Amin, Accumulation on a World Scale, 17. Letter to New York Times, 12 January 1977, quoted in Stavrianos, op. cit., 447. Mathieson, op. cit., 11.

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-3The Demand for a New International Economic Order: Setting the Agenda

B

eginning in the 1950s, there was a growing concern on the part of development practitioners, regarding the problem of underdevelopment and the need for the international community as a whole to assist in the improvement of the economic situation of the developing countries. Much of the early effort in this regard was directed at increasing aid flows from the developed countries in support of the development efforts of the developing countries. However during the 1960s, which was declared the first UN Development Decade, attention focused increasingly on the trade aspects of the relationship between the developed and the developing countries, especially in terms of market access for the products of the latter which was seen as a major vehicle for promoting growth. This was particularly evident in the discussions which took place during the first and second sessions of the UN Conference on Trade and Development (UNCTAD) held in Geneva in 1964 and in New Delhi in 1968, respectively. It was during this period that the slogan ‘trade not aid’ gained widespread currency. However, by the beginning of the 1970s, it had become evident that, despite the efforts during the 1950s and 1960s aimed at increasing aid flows and in improving market access for the products of the developing countries, the gap between the developed and the developing countries was increasing. Stavrianos has pointed out that ‘whereas the discrepancy in average per capita income between the First and Third Worlds was roughly 3 to 1 in 1500, it had increased to 5 to 1 by 1880, to 6 to 1 by 1900, to 10 to 1 by 1960 and to 14 to 1 by 1970.’1 Moreover, the developing countries felt increasingly excluded from the critical decision-making processes which shaped the international economic system and influenced their own economic destiny. There was, therefore, an increasing awareness that fundamental changes would need to be made in the structure of the system if the cause of development was to be advanced.

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The dissatisfaction of the developing countries was accentuated by the growing instability and uncertainty in the world economy during the early 1970s, as described in the previous chapter. There was a feeling that the entire system was in a state of deep crisis. As it happened, the crisis was further complicated by the action of the OPEC countries in 1973 in increasing the price of oil in the wake of the Arab-Israeli war. This action sent shock waves throughout the developed world because of its potential for transferring vast financial surpluses to sections of the developing world, with consequent implications for the operation of the international economic system. It even provoked veiled threats by some developed countries regarding the possible use of military force to ensure continued access by these countries to the critical raw materials of the developing world. It was against the background of these developments that President Boumedienne of Algeria, acting in his capacity as Chairman of the Non-Aligned Movement, proposed, following consultation with other developing countries, the convening of a special session of the UN General Assembly to discuss the problem of Raw Materials and Development. This was the origin of the Sixth Special Session of the General Assembly which was convened in April 1974.

The Conceptual Origins of the New International Economic Order The philosophical and programmatic content of the NIEO are embodied in the decisions taken during the Sixth Special Session of the UN General Assembly (1974); the provisions of the Charter of Economic Rights and Duties of States adopted during the Twenty-Ninth Regular Session of the Assembly (1974); and the decisions of the Seventh Session (1975).

(i)

The Sixth Special Session

The significance of the Sixth Special Session was that for the first time it placed squarely on the international agenda the issue of structural change in the international economy. Thus it marked a new departure in the negotiations between the developed and the developing countries on the problems of development and international economic cooperation. Moreover, by devoting a special session to economic issues, the international community signalled its recognition of the growing importance of such issues. The session dealt with a wide range of issues, including international trade, with special reference to the trade in primary commodities; industrialisation; the transfer of technology; sovereignty over natural resources;

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the transfer of financial resources to the developing countries; international monetary reform; the development of science and technology; economic cooperation among developing countries; and the restructuring of the social and economic sectors of the UN system. At the insistence of the developing countries, these issues were considered within an integrated framework which emphasised their essential interrelationship. Following intense negotiations during the period April 9, to May 1, 1974, the General Assembly adopted, without a vote, the Declaration and Programme of Action on the Establishment of the New International Economic Order, which were embodied in Resolutions 3201 (S-VI) and 3202 (S-VI), respectively.2 The main achievement of these resolutions was the articulation of the demand for a New International Economic Order and the elaboration of a conceptual framework for the realisation of that order. The Declaration outlined, as it were, the broad philosophical principles that were to govern the establishment of the New Order. It affirmed, among other things, that the New Order should be founded on a number of basic principles, including respect for the sovereign equality of states; their full and effective participation in solving economic problems in the common interest of all countries; acceptance of the exercise of permanent sovereignty over natural resources; the regulation and supervision of the activities of transnational corporations; the establishment of a just and equitable relationship between the prices of the exports and imports of the developing countries with a view to securing an improvement in their terms of trade and the expansion of the world economy; the reform of the international monetary system to promote the development of the developing countries; the granting of preferential and non-reciprocal treatment for developing countries; the promotion of the transfer of technology and the development of indigenous technology for the benefit of the developing countries; the conservation of natural resources; the establishment and strengthening of producers’ associations; and the strengthening of economic cooperation among the developing countries. The Declaration also emphasised the importance of the adoption of the International Development Strategy for the Second UN Development Decade as an important contribution to the development of a just and equitable system of international economic cooperation. In addition, it underlined the central role of the United Nations as a universal organisation in promoting the establishment of a new international economic order. In pursuance of the broad objectives outlined in the Declaration, the Programme of Action identified a number of urgent and specific measures to be taken by the international community in various fields in order to deal with

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the economic difficulties faced by the developing countries, with special reference to the needs of the least developed, the land-locked and island developing countries and those developing countries most seriously affected by economic crises and natural disasters. These measures were identified under nine broad headings, namely, raw materials and primary commodities related to trade and development; the international monetary system and financing for the development of the developing countries; industrialisation; the transfer of technology and the regulation and control of the activities of transnational corporations; the Charter of Economic Rights and Duties of States; economic cooperation among developing countries; the exercise of sovereignty over natural resources and the strengthening of the role of the United Nations System in the field of international economic cooperation. In the case of raw materials, which were a major preoccupation of the session in the wake of OPEC action in 1973, the resolution not only advocated the adoption of measures for the exploitation, development and marketing of natural resources to serve the national interests of the developing countries, but also emphasised the need for efforts to be made to facilitate the functioning of producers’ associations. Similarly, the need to establish a just and equitable relationship between the imports and exports of the developing countries was also emphasised. Moreover, the increased processing of raw materials in the producer developing countries was underlined. Action was also urged to deal with the problem of food shortages in the developing countries, including specific measures to increase food production by ensuring the provision of essential inputs, such as fertilisers, the improvement of storage facilities as well as measures to prevent crop damage and to arrest desertification. In the area of trade, special measures for the amelioration of the terms of trade and chronic trade deficits of the developing countries were advocated, including improved access to the markets of the developed countries for the exports of developing countries, through the removal of tariff and non-tariff barriers and restrictive business practices; the formulation of commodity agreements designed to stabilise markets for raw materials and primary commodities of export interest to developing countries; the establishment of improved compensatory financing schemes; the setting up of buffer stocks within the framework of commodity arrangements; and the implementation, improvement and enlargement of the Generalised System of Preferences (GSP) in the interest of the developing countries. The developed countries were also called upon to make the necessary adjustments in their economies to facilitate the expansion of imports from the developing countries. Moreover, it was asserted that international trade should

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be governed by the principles of non-reciprocity and preferential treatment of developing countries in multilateral trade negotiations between developed and developing countries. Similarly, emphasis was also placed on promoting increasing and equitable participation of the developing countries in world shipping and on minimising the cost of insurance and reinsurance for developing countries. In international money and finance, special emphasis was placed on the reform of the international monetary system with a view to controlling inflation and exchange rate instability in order to maintain the real value of the currency reserves of the developing countries; the promotion of the full and effective participation of the developing countries in the decision-making process in the IMF; the provision of additional liquidity with special regard to the needs of the developing countries through the allocation of Special Drawing Rights (SDRs); the establishment of a link between special drawing rights and additional development financing; the promotion of an increased transfer of real resources to the developing countries; and the review of the operations of the IMF in order to enable developing countries to make more effective use of the terms for credit repayments, stand-by arrangements and compensatory financing. Within the framework of these broad objectives, the programme recognised the need for further democratisation of the decision-making process of the international financial institutions through a more equitable allocation of voting rights. In addition, it identified specific measures for financing the longer term development needs of the developing countries, as well as their short term balance of payments requirements. The most important of these measures dealt with the implementation by the developed countries of the provisions of the International Development Strategy regarding financial transfers to the developing countries, as well as an increase in the official component of such transfers. In an effort to expand the flow of capital to developing countries, the programme called for the promotion of foreign investment from developed countries to the developing countries in keeping with the latter’s requirements. Regarding the issue of debt, which even then was already emerging as a major problem for some developing countries, the adoption of urgent measures was advocated in order to mitigate the adverse consequences for development deriving form the burden of external debt. In this respect, it was emphasised that debt renegotiation should take place on a case-by-case basis with a view to concluding agreements on debt cancellation, moratorium, rescheduling or interest subsidies. International financing institutions were called upon to reorient their lending policies to suit the urgent needs of the developing countries.

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Measures were also identified to accelerate the industrialisation of the developing countries through, among other things, the financing by developed countries and international financial institutions of specific industrial projects and the provision by appropriate agencies of the UN system of technical assistance designed to promote vocational training and the development of management personnel. The resolution also called for the formulation of an international code of conduct on the transfer of technology in keeping with the needs of developing countries and the development of their technological capacity through improved access to modern technology, as well as the development of indigenous technologies. The fifth major area of the Programme of Action dealt with the regulation of the activities of transnational corporations through the adoption of an international code of conduct with a view to, among other things, prevent interference in the internal affairs of the host countries; eliminate restrictive business practices; regulate the repatriation of profits accruing from their operations; and promote the reinvestment of such profits in the developing countries. Another important decision included in the Programme was the endorsement of the proposed Charter of Economic Rights and Duties of States as a contribution to the establishment of a more rational system of international economic cooperation, and its adoption at the twenty-ninth regular session of the UN General Assembly. As a follow-up to the resolution adopted on the subject at the TwentyEighth Session, the promotion of cooperation among developing countries was identified as a major element of the Programme of Action. Accordingly, it was asserted that collective self-reliance and growing cooperation among the developing countries in such fields as industry, money and finance, science and technology, shipping and mass communication would further strengthen their role in the new international economic order. In addition, developing countries were urged to support the establishment of suitable mechanisms to defend commodity prices. The action by the OPEC countries was, therefore, welcomed, although the provision of assistance to enable other developing countries to cope with the impact of this action was recognised as a paramount need. Growing out of the concern on the part of the oil-exporting countries regarding threats from some quarters against their efforts to control their petroleum resources, the Programme urged action to defeat attempts to prevent the free and effective exercise of the right of every state to permanent sovereignty over its natural resources. Indeed, the relevant UN agencies were requested to provide assistance to the developing countries to enable them to operate nationalised industries more effectively.

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In order to promote the aims and objectives of the New International Economic Order, member states were called upon to make full use of the United Nations in the implementation of the Programme of Action. In this connection, the General Assembly decided to carry out an overall review of the implementation of the Programme while ECOSOC was requested to coordinate the activities of the various organisations of the UN system and bring to the attention of the Assembly any difficulties encountered in the implementation of the Programme. Special emphasis was placed on the strengthening of UNCTAD in order to enable the organisation to contribute to the development of the international trade in raw materials. Finally, it was agreed that the Programme of Action complemented the objectives of the International Development Strategy and, therefore, the mid-term review and appraisal of the Strategy should take account of various provisions of the Programme. A major element of the Programme of Action, which is sometimes overlooked, is the Special Programme which was designed to deal with the problems of the developing countries most seriously affected by the economic crisis of that period (the so-called MSA countries). The Special Programme explicitly recognised that the economic difficulties of a number of developing countries were significantly aggravated by the steep increases that had occurred in the price of their essential imports. It, therefore, identified a number of special measures to provide emergency assistance to the MSA countries,3 pending the resolution of their longer term problems through the restructuring of the world economic system. Under the Special Programme, the UN Secretary-General was requested to launch an emergency operation in order to enable the MSA countries to maintain their essential imports. In support of this effort, the industrialised countries and other potential contributors were called upon to provide assistance commensurate with the needs of the situation and over and above existing aid levels. Such assistance was to take the form of deferred payment arrangements for essential commodities; long-term supplier credit; financial assistance on concessional terms; interest subsidies on commercial borrowing; the provision of investment funds and capital goods on more favourable terms; and the subsidising of additional transit and transport costs, particularly in the case of land-locked countries. As part of the Special Programme, it was decided to establish a Special Fund, to be financed from voluntary contributions from industrialised and other potential contributors, to provide emergency relief and development assistance to the MSA countries. In addition, an Ad Hoc Committee, comprising 36 member states appointed by the President of the General Assembly, was established in order to make recommendations regarding the operation of the

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Fund. The Secretary-General of the United Nations and the heads of international organisations, including UNCTAD, the World Bank, the IMF and UNDP, were requested to assist the Ad Hoc Committee in carrying out its functions. The Ad Hoc Committee was requested to submit its report and recommendations to ECOSOC, which was in turn required to submit appropriate recommendations to the twenty-ninth session of the General Assembly. Moreover, it was agreed that the question of special measures for the MSA countries would be considered as a high priority item at that session. As can be seen, the Declaration and Programme of Action adopted at the Sixth Special Session set out a comprehensive set of measures for effecting changes in the international economic system. The far-reaching provisions embodied in these documents were influenced to a large extent by the newfound economic power of the OPEC countries and the growing determination of the developing countries as a whole to change the structure of the system in order to accelerate the pace of their own development. What is significant is that in the Special Programme, and the Special Fund which formed part of it, the international community made specific provision for those developing countries affected by the economic dislocation which occurred in the wake of the OPEC action in increasing oil prices and which was aggravated by the significant increases in the price of manufactured goods and fertilisers supplied by the developed countries. Unfortunately, the contributions to the so-called UN Emergency Operation Special Account4 amounting to $262 million which were distributed to the MSA countries,5 were inadequate to meet the total needs of these countries. This proved to be a major weakness in the position of the developing countries in their effort to promote the establishment of the New International Economic Order. It should be pointed out that not all of the measures embodied in the Declaration of Programme of Action adopted at the Sixth Special Session were supported by the developed countries, many of which felt that there was no need for the creation of a new international economic order but that the existing international economic and financial institutions, such as the World Bank and the IMF, could be adapted and expanded to cater to the needs of the developing countries. For example, the United States, the then Federal Republic of Germany and Japan, which were ideologically committed to the free market system, and therefore, opposed to the interventionist philosophy implicit in the NIEO programme, entered strong reservations on several aspects of the resolutions that were adopted, while more limited reservations were recorded on behalf of the EEC. The Soviet Union (as it then was) and other Eastern European socialist states expressed support for many aspects of the Declaration and Programme of

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Action but denied any historical responsibility for the underdevelopment of the developing countries which they blamed on the developed capitalist countries. Thus, apart from articulating the theoretical need for a new international economic order, the Sixth Special Session also highlighted the fundamental conceptual divide which existed between the developed and the developing countries on the type of solution necessary to achieve a rational and equitable international economic order. This basic difference continued to influence the dialogue on change in the international economic system although, during the course of the negotiations, a number of shifts occurred in the positions of the developed countries which were influenced by factors such as regime change and a redefinition of tactical and strategic objectives.

(ii)

The Charter of Economic Rights and Duties of States

The Twenty-Ninth Regular Session of the UN General Assembly held in 1974, in the wake of the Sixth Special Session, dealt with a wide range of issues and adopted resolutions on a number of broad agenda items that were considered annually in the Second Committee which deals with international economic and financial issues. For example, the resolutions adopted during the Session covered such items as the report of ECOSOC, the report of the Trade and Development Board of UNCTAD, UNIDO, UNITAR, UNEP, the reduction of the increasing gap between the developed and the developing countries, the quantification of scientific and technological activities related to development, the UN University, assistance in cases of natural disasters as well as the implementation of the overall Programme of Action on the Establishment of the New International Economic Order adopted during the Sixth Special Session held earlier that year. However, the main achievement of the Session was the adoption of the Charter of Economic Rights and Duties of States, proposed on Mexico’s initiative, which set out a number of important norms governing inter-state relations in the field of international economic cooperation. The work of drafting the Charter was in fact assigned to a Working Group comprising 40 government representatives from both developed and developing countries. The Group held a series of meetings in Geneva, Mexico and New York but failed to arrive at an agreed draft, despite substantial agreement on some issues. As a result of the failure to agree on a consensus document, the discussions on the Charter were shifted, on Mexico’s initiative, from the Working Group of Forty to the Group of 77 which subsequently appointed a Drafting Group, comprising members from the original Group of Forty, as well

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as other interested developing countries, to prepare a text acceptable to the Group of 77 as a whole. Following a series of meetings, the Drafting Group prepared a text which was introduced in the Second Committee in the name of the Group of 77. Three developing countries, namely, Afghanistan, Brazil and Paraguay, which found certain provisions of the Charter controversial, subsequently withdrew their sponsorship, of the text but continued to support the Charter as a whole. The Charter,6 which contains a preamble and thirty-four articles, provides a set of general principles governing international economic relations aimed at creating a just and stable world order. The several articles cover issues such as permanent sovereignty over natural resources; the control of shared natural resources; the liberalisation of international trade; the position of land-locked developing countries; the preservation and enhancement of the environment, as well as the question of the utilisation of resources derived from disarmament for development purposes. Following their failure to obtain the full incorporation of their views into the draft Charter, the developed countries made an unsuccessful attempt to defer its adoption until the Seventh Special Session of the General Assembly, in order to enable a wider consensus to emerge. But this proposal was rejected by the developing countries which felt that there was little prospect of narrowing the gap between the two sides on the fundamental issues contained in the Charter. Consequently, both in the Second Committee and in the Plenary of the General Assembly a number of developed countries voted against the Charter while others either abstained or voted against specific provisions. Because of its comprehensive scope and the controversial nature of some of the issues with which it deallt, it was perhaps inevitable that the General Assembly failed to achieve consensus on the Charter. In the voting in the Assembly on the Charter as a whole, there were 120 votes in favour, six against and ten abstentions. The lack of consensus was underlined by the fact that several delegations requested recorded votes on specific articles of the Charter. Altogether, there were over 70 recorded votes on various articles – a number perhaps unprecedented in the history of the United Nations on a single resolution. The main difficulty for the developed countries stemmed from the provisions of Article 2 of the Charter, dealing with the issue of permanent sovereignty over natural resources and other forms of natural wealth. Under sub-paragraph (c) of this Article each state is held to have the right ‘to nationalise, expropriate or transfer ownership of foreign property in which case appropriate compensation should be paid by the state adopting such measures, taking into account the relevant laws and regulations and all circumstances that the state

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considers pertinent’. Moreover, in cases where the question of compensation gives rise to controversy, the Article states that ‘the issue shall be settled under the domestic law of the nationalising state and by its tribunals, unless fully and mutually agreed on by all states concerned that other peaceful means be sought on the basis of the sovereign equality of states and in accordance with the principles of free choice of means’. The developed countries, on the other hand, sought to insert in the Charter an unequivocal guarantee of the right of compensation in the case of nationalisation and also a clause to the effect that disputes arising therefrom should be subject to international arbitration and not the laws of the nationalising state. Similarly, the developed countries found unacceptable the provisions of Articles 5, 19 and 28 of the Charter which dealt, respectively, with the formation of producers’ associations; the granting of preferential, non-reciprocal and non-discriminatory treatment to the developing countries; and adjustments in the prices of the exports of the developing countries relative to the prices of their imports. A number of developing countries also found some provisions of the Charter unacceptable for one reason or another. For example, Iran, reflecting its new status as a capital surplus country, also expressed its unease over subparagraph (c) of Article 2 dealing with the nationalisation of foreign property, on the ground that it would discourage investment in the developing countries. Some developing countries, while supporting the Charter as a whole, abstained on Article 3 dealing with the exploitation of ‘shared natural resources’ in view of the ambiguity in its formulation. According to the article ‘in the exploitation of natural resources shared by two or more countries, each state must cooperate on the basis of a system of information and prior consultation in order to achieve the optimum use of resources without causing damage to the legitimate interest of others’. This article was inspired largely by Argentina’s concern to force Brazil into consultation over the use of the waters of the Parana River, which is shared by the two countries, on the assumption that the exploitation of shared resources, by one party is conditional on prior consultation with the other party. However, it was felt by some delegations that the article, as formulated in the Charter, could also be interpreted to mean that in the context of the existence of shared resources the formality of prior consultation by one state, as distinct from actual agreement between the states involved, might be deemed sufficient for the party that consults, however superficially, to proceed with the exploitation of the natural resources in question. Guyana, for example, abstained in the voting on this article because of its dispute with Venezuela regarding the latter’s claim to the Essequibo region.

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The several reservations on the part of both developed and developing countries demonstrated the tenuous nature of the support for certain provisions of the Charter. However, Article 34 of the Charter did provide for a review of its provisions to allow for improvements and additions which might be necessary in the light of changing circumstances. Be that as it may, the Charter exercised significant influence on the approach adopted by the developing countries in their discussions with the developed countries on international economic issues.

(iii) The Seventh Special Session The Seventh Special Session, which was devoted to ‘Development and International Economic Cooperation‘, was held amidst extensive speculation regarding its potential to carry forward the initiatives of the Sixth Special Session and the Twenty-Ninth Regular Session and thereby contribute to a fundamental improvement in the situation of the developing countries. In terms of the organisation of its work, the Assembly established an Ad Hoc Committee to deal with the main agenda item, Development and International Economic Cooperation. It was decided, however, that general statements on the item would be confined to the debate in the Plenary. Several delegations took the opportunity to make general statements. Most of the Commonwealth countries which took part in the debate made reference to the report of the Commonwealth Group of Experts on the New International Economic Order7 which was endorsed at the Commonwealth Finance Ministers meeting held in Georgetown, Guyana, in August 1975, and requested that it be noted as a contribution to the dialogue on the establishment of a new international economic order. However, perhaps the most important statement in the general debate from the side of the developed countries was that made by the United States. The statement, which was originally intended to be delivered by the Secretary of State, Henry Kissinger, was in fact read by the US Permanent Representative to the United Nations, Ambassador Daniel Patrick Moynihan, Dr Kissinger being at the time engaged in the Middle East peace negotiations. The US statement contained a number of specific proposals which were intended to serve as a practical programme of international economic cooperation. Among the measures proposed were (a) (b)

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the creation of a $2.5 billion development security facility within the IMF to stabilise the export earnings of the developing countries; a $6 billion expansion of the capital of the Inter-American Development Bank;

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(c) (d)

(e) (f)

(g) (h) (i)

(j) (k) (l) (m)

(n)

expansion of the capital of the World Bank’s International Finance Corporation (IFC) from a level of $100 million to $400 million; the creation of an International Investment Trust, managed by the IFC, to channel capital for investment in public, private and mixed enterprises in the least developed countries; creation of an International Energy Institute to bring together consumers and producers on the problem of energy development; an expansion of the capacity of international agricultural research centres; the creation of an International Industrialisation Institute for Research on Industrial Technology and an International Centre for the Exchange of Technological Information; the creation of an international system of nationally held grain reserves – with total reserves reaching 30 million tons of wheat and rice; the establishment of consumer-producer forums for key commodities; liberalisation of the IMF financing for buffer stocks; expansion of the activities of the World Bank in the development of raw material resources and support for the UN Revolving Fund for Natural Resources Exploration; a trust fund in the IMF of up to $2 billion to provide balance of payments support for the poorest countries; the promotion of community level integrated health services in the developing countries; a doubling of US bilateral agricultural assistance to $582 million; support for the establishment of the International Fund for Agricultural Development (IFAD) as a major source of capital to meet the critical problems of the least developed countries and; the establishment of an intergovernmental committee to work on the restructuring of the UN machinery in the social and economic sectors.

Despite this impressive list of proposals, the developing countries were of the view that the measures were conceived largely within the framework of the existing structure of international economic relations. In fact, it was felt that they were intended to ensure an expansion of the role and function of institutions such as the IMF and the World Bank and its affiliated agencies, the IFC and the IDA, as a solution to the problems of the developing countries, with some increase in bilateral and multilateral assistance to these countries, particularly in the area of food supplies. Moreover, it was evident that some of the proposals were designed to facilitate access of the developed countries to the raw materials of the developing countries through the accelerated production of such materials. In essence, however, there was little concession

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to fundamental change of the scope the developing countries envisaged in their demand for the establishment of the New International Economic Order. In fact, the US proposals were clearly intended as an alternative to the establishment of such an order which to a large extent reflected the tactical stance adopted by that country during the Ford administration in which it sought to avoid any serious commitment to the principles of the NIEO. In terms of its actual work, the Ad Hoc Committee was divided into two separate groups. Group I dealt with international trade, the transfer of resources for financing the development of the developing countries and international monetary reform, while Group II dealt with science and technology, industrialisation, food and agriculture and the restructuring of the economic and social sectors of the UN system. In both groups the position paper prepared by the Group of 77 served as the main basis for negotiation, although supplementary papers were also submitted for consideration by other countries and organisations, most notably, the USA, the EEC (European Union), Japan, the East European socialist countries and China. Consequently, the negotiations in the two groups centred largely on an attempt to reconcile the various texts. While some progress was made in reconciling specific points in the various texts submitted as a basis for negotiation, consensus between developed and developing countries advanced in a very uneven fashion. The main difficulties centred on the sections of the position paper of the Group of 77 dealing with the integrated programme on commodities; indexation; the adoption of a legally binding code of conduct on the transfer of technology; and the proposed UN Conference on Debt. Similarly, the US proposal for the establishment of consumer-producer forums on key commodities also provoked some controversy since it was seen as a direct challenge to the efforts of the developing countries to consolidate the position of producers’ associations. In light of the slow progress in the negotiations, some developed countries proposed informally that the Session should be adjourned and reconvened in early 1976. However, in view of the sense of urgency on the part of the developing countries in creating the basis for a new structure of international economic relations, the Group of 77 decided against the proposal and insisted on completing the work of the Session, as originally scheduled. Following two weeks of debate and exchange within the two negotiating groups established by the Ad Hoc Committee, the General Assembly adopted, on the recommendation of the Committee, a comprehensive resolution8 setting out specific measures in the fields of international trade; the transfer of real resources for financing the development of the developing countries and international monetary reform; science and technology; industrialisation; food and agriculture; and cooperation among developing countries.

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The measures set out in the various sections of the resolution closely paralleled the provisions of the Programme of Action adopted at the Sixth Special Session, although they sought to elaborate various aspects and also add new elements designed to take account of developments which had taken place since the Sixth Special Session. For example, the section dealing with international trade reiterated the demand for concerted efforts to assist the developing countries in expanding and diversifying their trade and production capacity in order to increase their export earnings and improve their terms of trade. Moreover, it sought to carry forward the initiative of the Sixth Special Session which had called for the preparation of an integrated programme by charging UNCTAD IV, which was due to be held in May 1976, with the responsibility of reaching decisions on the improvement of market structures in the field of raw materials and commodities, including decisions with respect to the establishment of an integrated programme on commodities. The resolution, therefore, provided UNCTAD IV with an important mandate to arrive at definitive decisions on the subject. Other elements of the resolution dealing with international trade called on the developed countries to implement the principle of standstill in respect of imports from the developing countries; to take effective steps within the framework of the Multilateral Trade Negotiations (MTNs) for the reduction or removal of non-tariff barriers; and to continue and expand the Generalised System of Preferences (GSP). They were also requested to apply countervailing duties only in accordance with internationally agreed obligations and to eliminate restrictive business practices adversely affecting international trade, particularly the trade of the developing countries. Finally, UNCTAD was requested to continue to study indexation schemes and also to prepare a report on the relationship between the prices of raw materials and commodities exported by the developing countries and their final consumer price and submit suitable reports, if possible, to UNCTAD IV. The proposal for the expansion and improvement of the Generalised System of Preferences (GSP) ‘through wider coverage, deeper cuts and other measures’ provoked considerable debate among the developing countries themselves, since the African, Caribbean and Pacific (ACP) countries, which enjoyed preferential access to the European Economic Community (EEC) under the EEC/ACP Lomé Convention, were reluctant to see these preferences eroded. Consequently, a proviso was included to the effect that the expansion and improvement of the GSP should take account of the interests of those developing countries which enjoyed special advantages and that ways and means should be found for protecting their interests. This issue continued to be a point of controversy between the ACP countries and some Latin American

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countries, most notably Colombia and Brazil, which also sought more favourable access to the EEC. As aspects of the GSP were further expanded, the ACP countries began to demand compensation for the loss of preferences, as was evidenced by the decisions arrived at during the Fourth Ministerial Meeting of the Group of 77 held in Arusha, Tanzania, in January 1979. The section of the resolution dealing with the transfer of resources and international monetary reform reiterated some of the main provisions contained in the Programme of Action, adopted at the Sixth Special Session, such as an increase in the net transfer of resources to the developing countries; the establishment of a link between special drawing rights (SDRs) and additional development financing; and the increasing participation of the developing countries in the decision-making organs of international finance and development institutions. However, this section of the resolution was more comprehensive in scope than the Programme of Action, and its emphasis was somewhat different. While the Sixth Special Session emphasised the need for a reform of the international monetary system to check inflation, to eliminate exchange rate instability and to ensure an orderly creation of liquidity, the Seventh Special Session focused on a number of specific measures to increase the flow of development resources to the developing countries, including an increase in the resources of the World Bank Group and a liberation of the compensatory financing facility of the IMF. Similarly, whereas the Sixth Special Session pointed to the general need to mitigate the debt problems of the developing countries, the Seventh Special Session specifically mandated UNCTAD IV to examine the need to convene a conference on the subject. Moreover, there was a clear and unequivocal call during the Seventh Special Session for a reduction in the role of national reserve currencies and the establishment of special drawing rights (SDRs) as the central reserve asset of the international monetary system. In the field of science and technology, the Seventh Special Session expanded considerably on the decisions of the Sixth Session which focussed mainly on the need for the formulation of a code of conduct for the transfer of technology to the developing countries. Not only did it decide that work should continue on the code of conduct in order to enable decisions to be taken on the subject at UNCTAD IV, including decisions on the legal character of the code, but it also identified specific measures to be adopted to strengthen and develop the scientific infrastructure of the developing countries. For example, the developed countries were urged to contribute to the establishment of an industrial technological information bank in order to provide a greater flow of technological information to the developing countries and also to increase their research devoted to the specific problems of the developing countries. In

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seeking to achieve the strengthening of the scientific and technological capacity of developing countries, the United Nations system was required to play a major role, with appropriate financing, in promoting international cooperation among states for the application of technology. Finally, it was decided that a United Nations Conference on Science and Technology for Development should be held in order to strengthen the technological capacity of the developing countries. Although the resolution also urged the formulation of national and international policies to avoid the ‘brain drain’, the discussion of this subject proved somewhat controversial since many countries were reluctant to endorse proposals which would prevent the free movement of skilled personnel. Doubtless, the position of some developed countries, such as the United States, was informed by political as well as ideological considerations which were directly opposed to the policies of countries which imposed political constraints on the movement of scientific personnel. The provisions on industrialisation were influenced to a large extent by the recommendations emanating from the Second General Conference of UNIDO held in Lima, Peru, in March 1975. The Assembly endorsed the socalled Lima Declaration and Plan of Action on Industrial Development Cooperation and called on governments to contribute to the achievement of its objectives. The developed countries were requested to adopt policies to encourage the deployment of less competitive industries to the developing countries. A system of consultations, as provided for in the Lima Plan of Action, was to be conducted within UNIDO in order to negotiate agreements in the field of industry between the developed and developing countries and among the developing countries themselves. A number of additional measures were identified relating to the dissemination of information about priority areas for industrial cooperation between developed and developing countries and also regarding the utilisation of the knowledge, experience and capacity of the United Nations system in the promotion of industrial cooperation. In keeping with the decision of the Lima Conference to convert UNIDO into a specialised agency, the Assembly decided to establish an intergovernmental committee to meet in Vienna in order to draw up an appropriate constitution for this purpose. Food and agriculture were also the subject of extensive discussion during the Session, in view of the growing concern about actual and potential food shortages in a number of developing countries. Both developed and developing countries in a position to do so were, therefore, urged to increase assistance to the developing countries for agriculture and food production. The need for increased interaction between food production and socio-economic reforms in order to promote an integrated programme of rural development was also

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emphasised. The Consultative Group on Food Production and Investment in Developing Countries was requested to identify developing countries with a potential for rapid and efficient increase of food production in order to enable an appropriate concentration of resources designed to stimulate increased agricultural production in the developing countries. Similarly, all countries were urged to accept the principle of a minimum food aid target which was set at 10 million tons of food grains for the period 1975–76 and also to subscribe at the International Undertaking on World Food Security designed to build up and maintain world food grain reserves to cover major production shortfalls. Finally, in order to make additional resources available for agricultural production, developed and developing countries in a position to do so were called upon to contribute to the proposed International Fund for Agricultural Development (IFAD) in order to enable the Fund to come into being by the end of 1975 with initial resources of SDR 100 million. Although the developing countries had traditionally asserted their exclusive competence to take the necessary decisions to promote cooperation among themselves, the developed countries as well as the UN system were urged to provide, as and when requested, support and assistance to the developing countries in strengthening and expanding such cooperation. This provision was included at the insistence of the developing countries as a follow up to the initiatives taken on the subject at the Twenty-Eighth and TwentyNinth Regular sessions and at the Sixth Special Session and was designed to ensure appropriate support to such cooperation, albeit on terms and conditions determined by the developing countries. The final section of the resolution dealt with the restructuring of the economic and social sectors of the UN system. In this connection, the Assembly decided to establish an Ad Hoc Committee to prepare detailed proposals on the subject. In carrying out its work the Committee was requested to take into account all relevant documentation, including the report of the Group of Experts on the Structure of the United Nations system.9 This decision represented a major initiative on the part of the Assembly that was to lead to significant changes in the economic and social sectors of the UN system, including the appointment of a Director-General for Development and International Economic Cooperation. As can be seen, the Seventh Special Session took a number of important decisions which both complemented and expanded the provisions embodied in the Declaration and Programme of Action adopted at the Sixth Special Session. In this respect, it may be said that the decisions of the two sessions formed a conceptual unity in terms of their prescription for change in the international economic system.

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Significantly, during the Seventh Special Session there emerged a greater degree of ‘consensus’ than existed during the Sixth Special Session and the Twenty-Ninth Regular Session. But even so, the Assembly failed to achieve ‘complete’ consensus on number of crucial issues, including the adoption of an integrated programme on commodities which was deferred for consideration at UNCTAD IV; the actual achievement of the official development assistance (ODA) target of 0.7 per cent of GNP for the transfer of real resources to the developing countries; the establishment of a link between Special Drawing Rights (SDRs) and development assistance; and the replacement of national reserve currencies by SDRs as the central reserve asset of the international monetary system. Although the resolution adopted at the Session was based largely on the draft document prepared by the Group of 77, it did reflect some of the proposals submitted by the developed countries, though not to the extent that the latter would have wished. By and large, however, the proposals which had been submitted by the developed countries, including those by the United States, although constructive in many respects, suggested that some developed countries were not yet ready to abandon their reservation on the need for the establishment of a new international economic order based on a comprehensive approach to development but preferred instead a piecemeal, case by case, approach to the economic problems facing the international community. There was also a clear preference on the part of the developed countries to utilise existing international institutions such as the World Bank and the IMF to deal with these problems. In order to achieve a broad consensus, the developing countries were forced to make concessions to the positions put forward by the developed countries on various issues. The strategy adopted by the developing countries was to make concessions to the comparatively liberal positions advanced during the negotiations by some Western European countries such as the Netherlands and Sweden which were generally receptive to a number of provisions of the NIEO. This strategy had the effect of isolating the hard-line developed countries, such as the United States, the Federal Republic of Germany (as it then was) and Japan, and, therefore, proved successful on a number of occasions in persuading these countries to join in the consensus. As it turned out, no country opposed the resolution as a whole, although the US, Japan and the EEC recorded reservations on specific aspects. Be that as it may, the resolution adopted at the Seventh Special Session, together with those adopted at the Sixth Special Session and the Charter of Economic Rights and Duties of States adopted at the Twenty-Ninth Regular

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Session succeeded in defining the overall philosophical and programmatic framework for the establishment of the New International Economic Order. Taken together, the various measures which may be said to make up the NIEO, fell within three broad categories. The first set of measures, which were normative in nature, dealt with the establishment of a number of general principles to govern the operation of the international economic system, including the assertion of national sovereignty over natural resources,10 the introduction of a code of conduct for regulating the activities of transnational corporations and the more effective participation of the developing countries in international economic decision-making particularly, in the IMF and the World Bank. Secondly, a number of specific measures were identified for action in respect of improved access to markets, the stabilisation of commodity prices, support for industrialisation and debt reduction. Finally, special emphasis was placed on strengthening the United Nations which, because of its broadly democratic character, the developing countries saw a forum in which they could participate on an equal basis with the developed countries – unlike the IMF and the World Bank which were governed by a system of weighted voting determined by the financial contributions of the various member countries. This overall conception of the NIEO implicitly influenced the approach to the negotiations on the subject. The challenge facing the international community following the Seventh Special Session was to find ways of translating, through a series of negotiations, these principles and programmes into a new structure of international relations. The following two chapters will examine the progress and outcome of the negotiations which were carried out in various international fora during the period 1975 to 1983.

NOTES 1. 2. 3.

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Stavrianos, op. cit., 37. See General Assembly Official Records: Sixth Special Session, Supplement No. 1 (A/9559). The following criteria were adopted to identify the so-called MSA countries and the specific kinds of assistance required by them, namely, low per capita income as a reflection of relative poverty, low productivity and low level of technology and development; sharp increase in their import cost of essentials, relative, to export earnings; high ratio of debt servicing to export earnings; insufficiency in export earnings, comparative inelasticity of export income and unavailability of exportable surplus; the adverse impact of higher

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4.

5.

6.

7.

8.

9. 10.

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transportation and transit costs; and the relative importance of foreign trade in the development process. The contributors to the Fund were: Algeria, Australia, European Economic Community (European Union), Iceland, Iran (Islamic Republic of), Japan, Kuwait, Netherlands, Norway, Saudi Arabia, Sweden, United Arab Emirates, United Kingdom, Venezuela and Yugoslavia. In 1975 these countries were: Afghanistan, Bangladesh, Benin, Burma, Burundi, Cape Verde, Central African Republic, Chad, Democratic Kampuchea, Democratic Yemen, Egypt, El Salvador, Ethiopia, Ghana, Guinea, GuineaBissau, Guyana, Haiti, Honduras, India, Ivory Coast, Kenya, Lao People’s Democratic Republic, Lesotho, Madagascar, Mali, Mauritania, Mozambique, Niger, Pakistan, Rwanda, Samoa, Senegal, United Republic of Tanzania, Upper Volta and Yemen. The Charter is embodied in Resolution 3284 (XXIX) December 12, 1974 – see General Assembly Official Records: Twenty-Ninth Session, Supplement No. 31 (A/9631), 50–54. The interim report of the Group was published by the Commonwealth Secretariat in August 1975 and was followed by a Further Report published in March 1976. The Final Report of the Group was published in March 1977. UN General Assembly Resolution 3362 (S-VII) of 16 September 1975 entitled ‘Development and International Economic Cooperation’ – see General Assembly Official Records: Seventh Special Session, Supplement I (A/10301). A New United Nations Structure for Global Economic Cooperation, UN Publication Sales No. E75 11 A.7. It should be noted that the issue of permanent sovereignty over natural resources was not an academic question as far as the developing countries, and most notably the members of OPEC, were concerned since representatives of both the UK and France had advanced the notion of a ‘qualified sovereignty’ over natural resources in which they saw countries which possessed critical natural resources serving, as it were, as trustees for the exploitation of those resources for the benefit of the international community as a whole. The assertion of permanent sovereignty over natural resources as a principle recognised by the international community was, therefore, intended as a counter to the views advanced by some developed countries in the wake of the actions taken by OPEC during the 1970s.

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-4Negotiations on the New International Economic Order (1975 - 1977): The Search for Consensus

F

ollowing the Seventh Special Session, attention focused increasingly on the search for concrete solutions to a number of issues relevant to the development needs of the developing countries and the creation of a new structure of international economic relations articulated in the resolutions adopted on the New International Economic Order at the Sixth and Seventh Special Sessions, even though reservations continued to be expressed by some developed countries regarding certain aspects of that order. A number of conferences and meetings held between 1975 and 1983 were of special importance in view of their potential to advance the objectives of the New International Economic Order. This chapter covers the first phase of the negotiations (1975-1977), carried out during the Thirtieth Regular Session of the UN General Assembly, UNCTAD IV, the Conference on International Economic Cooperation (CIEC) and in the context of the work of the Committee on the Restructuring of the Economic and Social Sectors of the UN System.

The Thirtieth Session of the UN General Assembly The fact that the Thirtieth Regular Session of the General Assembly was held not long after the conclusion of the Seventh Special Session served to some extent, to limit its contribution to the solution of the major international economic issues since the debate on these issues was virtually exhausted during the two weeks in which the Special Session had met. Notwithstanding this disadvantage, the General Assembly, during the Thirtieth Regular Session, was able to adopt a number of decisions which served to advance the initiatives taken during the Seventh Special Session. Perhaps the most important resolution adopted during the session was that dealing with the Mid-Term Review and Appraisal of the International

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Development Strategy for the Second UN Development Decade.1 The strategy, which covered the period 1970–1979, was in the nature of a global blue print for the development of the developing countries, to be carried out with the active support of the international community. However, its adoption predated the articulation of the need for a new international economic order. Consequently, the mid-term review and appraisal of the strategy were carried out in a context which was quite different from that which obtained at the time of its adoption. The resolution embodying the appraisal of the strategy is a comprehensive document which, among other things, evaluates progress made towards the achievement of the goals and objectives of the Strategy against the background of developments in international economic relations. On this basis, it also identifies a number of tasks to be carried out in the implementation of the Strategy, including the extension of preferential treatment in favour of the developing countries in trade, as well as in areas other than trade; international norms and procedures to govern departures from the provisions of the standstill; the transfer of resources to the developing countries on a predictable, continuous and assured basis through, inter alia, the establishment of a link between development financing and SDRs; the possible utilisation of the proceeds from the exploitation of the resources of the sea-bed and the ocean floor, beyond the limits of national jurisdiction; and the full and effective participation of the developing countries in the international economic system. In effect, the resolution sought to update the Strategy in order to make it more reflective of the principles embodied in the resolutions on the New International Economic Order. This made the resolution understandably controversial, given the continuing reservations of some developed countries on the establishment of the New Order. Consequently, despite protracted negotiations between the developed and developing countries extending over several weeks, a number of developed countries found it difficult to give unconditional support to the final text. In the vote in the plenary of the General Assembly, there were 123 votes in favour of the resolution with eight abstentions. Other resolutions adopted during the session dealt with the acceleration of the transfer of resources to the developing countries; the integration of women in the development process; new dimensions in technical cooperation; the establishment of the International Fund for Agricultural Development (IFAD); measures against the corrupt practices of transnational and other corporations; the proposed Conference on International Economic Cooperation (CIEC); permanent sovereignty over national resources in the occupied Arab territories; the Charter of Economic Rights and Duties of States; and economic cooperation among developing countries.

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Apart from some disagreement on the resolutions dealing with controversial issues such as the Charter of Economic Rights and Duties of States, there was noticeably less conflict between the developed and developing countries, largely as a result of the climate of ‘consensus’ achieved during the Seventh Special Session. Moreover, since the Thirtieth regular session was meeting in advance of two major international conferences – the Paris Conference on International Economic Cooperation (CIEC), which was due to begin in December 1975, and UNCTAD IV, which was scheduled to take place in May 1976 – it served to establish an effective link between the Seventh Special Session and these two events.

UNCTAD IV The fourth session of the UN Conference on Trade and Development, which was held in Nairobi, Kenya, in May 1976, assumed special significance since it was felt that the Conference provided an excellent opportunity to advance the dialogue on the establishment of the New International Economic Order by adopting substantive resolutions on a number of critical issues, especially since the Seventh Special Session had referred the integrated programme on commodities to the Conference for decision. In fact, in preparation for the Conference, the Group of 77 had held its third ministerial meeting in Manila, Philippines, from January 26 to February 7, 1976, at which they adopted the so-called Manila Declaration and Programme of Action outlining their negotiating position on the several issues that were to be discussed at the Conference. In terms of its organisation, notwithstanding the formal appointment of a President and Rapporteur of the Conference and a Chairman and Rapporteur of a General Committee, the real work of the Conference was carried out in the five Negotiating Groups appointed to deal with the main agenda items, namely, Commodities; Multilateral Trade Negotiations (MTNs), Manufactures and Semimanufactures and the Transfer of Technology; Money and Finance and the Transfer of Real Resources; the problems of the Least Developed, Developing Island Countries, Land-locked Countries and also Economic Cooperation Among Developing Countries (ECDC); and Trade Relations Among Countries Having Different Economic and Social Systems and Institutional Issues. Although ECDC was formally the responsibility of Negotiating Group IV, a special drafting Group of the Conference was created to formulate proposals on the subject. During the general debate in plenary, the Conference was addressed by a number of heads of delegations of participating countries, as well as the

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representatives of various organisations within the UN system. As far as government representatives were concerned, important statements were made by President Ferdinand Marcos of the Philippines who travelled to Nairobi to formally present to the Conference the Manila Declaration and Programme of Action adopted at the Third Ministerial Meeting of the Group of 77 held in Manila, and by the US Secretary of State, Dr Henry Kissinger, whose speech, to some extent, set the tone for the negotiating position of the developed marketeconomy countries (Group B).2 In his statement, Dr Kissinger warned that a policy of nationalisation by the developing countries would lead to the concentration of capital and technology in the developed countries. He stated further that the USA was in a better position than any other country to survive economic warfare. The speech also gave early indication that the United States had considerable reservations on the integrated programme on commodities supported by the Group of 77 and, more particularly, on the Common Fund to finance buffer stocks which the developing countries saw as the cornerstone of the entire programme. As a counter to the proposal put forward by the Group of 77, Dr Kissinger proposed the establishment of an International Resources Bank to finance the development of natural resources in the developing countries. It was clear that this was an attempt to create an institution to safeguard corporate investment in the developing countries through international guarantees.

Commodities To a large extent, the work of Negotiating Group I became the centre piece of the Conference since it was this Group which dealt with the integrated programme on commodities on which the developing countries pinned their hopes for a more equitable trading relationship with the developed countries. The problem of commodities was one of the central issues in the discussions on international economic relations since it was recognised that the precarious market status of commodities produced by the developing countries which resulted in low prices for these products and, consequently, declining export earnings, served as a major obstacle to the development of these countries. The most important proposal put forward for dealing with this situation was the integrated programme on commodities, which, among other things, envisaged the establishment of international buffer stocks for a number of commodities which, together accounted, for the bulk of the export earnings of the developing countries, and the creation of a Common Fund to finance such stocks. It was originally estimated that the Common Fund would require capital amounting to $3 billion.

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At the broad conceptual level, the integrated programme, as formulated by the UNCTAD secretariat and endorsed by the developing countries, sought in effect to establish an international regime on commodities based on direct market intervention. The basic elements of the programme were embodied in the Manila Declaration and Programme of Action adopted by the Group of 77 at its third ministerial meeting. Apart from setting up international commodity stocking arrangements and the establishment of a Common Fund for financing such arrangements, the Manila Declaration and Programme of Action emphasised the importance of compensatory financing arrangements, indexation and action by producers’ associations as integral parts of the programme. The original product coverage under the programme was also slightly modified to take account of the fundamental interests of all developing countries. It was recognised, for example, that the programme would need to make special provision for the needs of a small number of food deficit developing countries whose interests, the UNCTAD study concluded, might be adversely affected by its operation. It was known even before the Conference that the developed market economy (Group B) countries had major reservations on the programme since they were opposed to the principle of intervention in international commodity markets which the programme envisaged. A number of these countries also expressed some scepticism about the validity of the underlying premises of the programme. The USA, the Federal Republic of Germany and France held firmly to this view throughout the negotiations. In view of the fundamental conceptual differences separating the position of the Group of 77 and some developed countries, particularly on the question of the Common Fund, very little progress was made in the negotiations during the first three weeks of the Conference. In this situation of potential deadlock, the Group of 77 decided to submit a slightly modified resolution from that contained in the Manila Declaration and Programme of Action, but this still failed to attract the support of some Group B countries. Consequently, the issue had to be referred to the Presidential Contact Group, comprising representatives from the several regional groups, which was established during the last week of the Conference in an attempt to resolve issues on which agreement could not be arrived at in the negotiating groups. Following intense consultations, the Presidential Contact Group agreed to a compromise text on the integrated programme, which was introduced in the name of the President of the Conference in lieu of the Group of 77 draft, which was withdrawn. Within the Group of 77, however, the African Group was reluctant to accept the compromise since it was felt that it did not provide firm enough guarantees for the establishment of a common fund which was

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considered crucial to the successful implementation of the integrated programme. While this was indeed the case, the opposition by the African Group also stemmed from the fact that the Group felt that during the final stages of the negotiations its views were not adequately represented in the Presidential Contact Group which hammered out the final compromise. The Group nevertheless agreed in the end to join in the consensus on the resolution. As finally agreed, the resolution3 provided for the adoption of an integrated programme on commodities and outlined, among other things, its basic objectives, its product coverage4 and also the international measures required to support the programme. In terms of the procedures and timetable, it was envisaged that a negotiating conference, open to all members of UNCTAD, would be convened not later than March 1977, and also that, prior to the conference, preparatory meetings would be organised to deal with such issues as the objectives, needs, structure, sources of finance, mode of operation, decision-making procedures as well as the management of the Common Fund. Preparatory meetings for international negotiations on individual products were to be organised in the period beginning September 1, 1976, to be followed by commodity negotiating conferences as soon as possible after the completion of each preparatory meeting. These negotiations were to be concluded by the end of 1978. Finally, the Trade and Development Board of UNCTAD was instructed to establish an ad hoc intergovernmental committee to coordinate the preparatory work and the negotiations, to deal with major policy issues that might arise, including commodity coverage, and to coordinate the implementation of the measures adopted under the integrated programme. Compared to the provisions included in the text of the Manila Declaration and Programme of Action, the resolution fell short of the original demands of the Group of 77. For example, according to the language used in the text, there was still no unequivocal commitment to the establishment of a common fund which the developing countries sought throughout the negotiations to secure, even though the spokesman for the Group of 77 made it clear that the purpose of the preparatory meetings to be convened by the Secretary-General of UNCTAD was not to engage in discussion on the merits of the Fund but rather to discuss the details of its operations. Indeed, it was significant that, following the adoption of the resolution, the United States, the Federal Republic of Germany and France made interpretive statements which expressed continued reservations on the usefulness of the Fund or made their support conditional on the outcome of the various preparatory meetings that the Secretary-General of UNCTAD was requested to convene. For example, the US representative stated at a subsequent press conference that participation in the preparatory meetings on the Common Fund should not be construed as a commitment to

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participate in subsequent negotiating conferences since such a decision would depend upon the results of the preparatory meetings and the work underway on individual commodities.5 Notwithstanding these qualifications, a number of developed and developing countries pledged financial contributions to the Common Fund during the course of the Conference. Overall, it may be said that although the resolution adopted in Nairobi did not secure all of the objectives sought by the developing countries, it did succeed in setting the stage for the developing countries to work towards the eventual establishment of the integrated programme on commodities and, more particularly, the Common Fund as an integral part of the programme.

Manufactures and Semi-Manufactures; the Multilateral Trade Negotiations; and the Transfer of Technology The expansion of the export trade of the developing countries in manufactures and semi-manufactures through increased access to the markets of the developed countries has, over the years, been one of the central tenets of the philosophy of UNCTAD. This emphasis was further accentuated with the adoption in 1975 of the Lima Declaration and Programme of Action on Industrial Development and Cooperation which called for the achievement by the developing countries of a target of 25 per cent of world industrial output by the year 2000 and which, in fact, implied a significant rate of growth in the export capacity of the developing countries in manufactures and semi-manufactures. In preparation for UNCTAD IV, the Group of 77 had outlined in the Manila Declaration and Programme of Action adopted in February 1976, a comprehensive strategy for expanding the export trade of the developing countries in manufactures and semi-manufactures. The major policy measures embodied in the strategy dealt, among other things, with the improvement of the Generalised System of Preferences (GSP) through the liberalisation of its terms and the extension of its coverage, the control of restrictive business practices adversely affecting the trade of the developing countries in manufactures, the redeployment of industries from the developed to the developing countries, and the provision of adequate financial assistance to accelerate the industrialisation process in the developing countries. At the Conference, it was agreed6 to adopt a number of specific measures designed to expand and diversify the export trade of the developing countries in manufactures and semi-manufactures. In terms of improved access to the markets of the developed countries, it was decided, for example, that the Generalised System of Preferences should continue beyond the ten-year period for which it was initially established and, in so doing, the interests of those

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developing countries enjoying special preferences should be taken into account. Additional measures agreed by the Conference were designed to increase the access of the developing countries to the markets of the developed countries through tariff reclassification and observance of the principle of the standstill. In addition, special emphasis was placed on strengthening the industrial capacity of the developing countries through the removal of restrictive business practices of transnational corporations, the increased processing of raw materials in the developing countries, and strengthening national enterprises in these countries. As was mentioned earlier, the terms and conditions for the expansion of the Generalised System of Preferences had been a source of continuing controversy within the Group of 77, with specific reference to the application of discriminatory preferences among developing countries. As primary producers, heavily dependent on export markets for their products, the members of the African, Caribbean and Pacific (ACP) Group had consistently defended the principle of discriminatory preferences among developing countries. However, some Latin American countries, although enjoying comparatively higher levels of development, had generally been reluctant to accept this principle. During the Seventh Special Session of the UN General Assembly, the question was heatedly debated within the Group of 77. The issue was finally settled in favour of the ACP countries after the African countries threatened to wreck the unity of the Group of 77 unless the principle of discriminatory preferences among developing countries was unequivocally accepted. In the face of this threat, the Latin American Group, led by Colombia, withdrew its opposition. The formulation which was accepted in the relevant section of the resolution adopted during the Seventh Special Session provided, among other things, for the extension of the Generalised System of Preferences beyond the ten-year period originally envisaged and for its improvement through wider coverage, deeper cuts and other measures ‘bearing in mind the interests of those developing countries which enjoy special advantages and the need for finding ways and means to protect their interests’. This was considered to be a reasonable formula since it was based on the rationale that the ACP countries, given their heavy dependence on the export of primary commodities, could not be expected to compete on an equal basis with those developing countries which had a significant manufacturing capacity. The issue was subsequently reopened during the special meeting of SELA (Sístema Económico Latinoamericano) held in Caracas in January 1976 and again during the third ministerial meeting of the Group of 77 in Manila. The

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formulation agreed on in the Manila Declaration and Programme of Action read as follows: The generalised system of non-discriminatory preferences should be improved in favour of the developing countries through the adoption, inter alia, of the following measures,taking into account the relevant interests of those developing countries enjoying special advantages as well as the need to find ways and means for protecting their interests . . . . Although the text refers to ‘non-discriminatory’ preferences, this was designed to prevent the sanctioning by the GSP of discriminatory provisions such as those contained in the 1974 US Trade Act, which sought to exclude from the benefits of the US Generalised System of Preferences countries which were members of ‘cartels’ and those which nationalised US corporate holdings without adequate compensation. As will be seen, however, the language in the second part of the text quoted above was essentially the same as that adopted at the Seventh Special Session and thus acknowledged the need to preserve the fundamental interests of the ACP countries which had special trade and economic links with the EEC under the Lomé Convention. The proposals presented by the UNCTAD Secretariat for consideration by the Fourth Conference indicated some movement away from the previously agreed position, since it suggested that the abandonment of discriminatory preferences, in favour of some developing countries, could be compensated for by the grant of new export opportunities in the markets of other developed countries. However, the ACP countries were not prepared to accept this as an adequate formula because of the uncertainty involved in actually finding alternative export markets and their inability to fully exploit such markets. Consequently, the Conference fell back on the more general formula that had been agreed during the Seventh Special Session and in Manila. Apart from the two resolutions adopted by the Conference on manufactures and semi-manufactures, three draft resolutions in the name of the Group of 77, dealing with export subsidies and countervailing duties; adjustment assistance measures; and safeguards and standstill, which were transmitted to the Conference by the Trade and Development Board had to be remitted to the permanent machinery of UNCTAD because of lack of agreement on a number of provisions contained in the resolutions. The second agenda item dealt with by Negotiating Group II was the Multilateral Trade Negotiations (MTNs) which, as stated in the Tokyo Declaration of September 14, 1973, had two major objectives, namely, the liberalisation of world trade to provide a more favourable climate for the

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conduct and expansion of such trade and securing additional benefits for the international trade of the developing countries through substantial improvement in the condition of access for the products of interest to a larger number of countries and, wherever appropriate, through measures designed to obtain stable, equitable and remunerative prices for primary products. The documentation prepared by the UNCTAD Secretariat for the Conference provided a concise review of the main developments in the MTNs and was designed to enable UNCTAD IV to make recommendations aimed at maximising the benefits that would accrue to the developing countries from the negotiations. However, the document underscored the point that the MTNs were being conducted within the framework and philosophy of the GATT. For this reason, it was felt that the MTNs were limited in their potential for dealing with the fundamental problems of developing countries in a number of areas. Notwithstanding these limitations, the Manila Declaration and Programme of Action stressed the importance of the commitments made in the Tokyo Declaration to secure additional benefits for the international trade of the developing countries and the importance of their fulfilment on a priority basis. It also reaffirmed the major principles to which the developing countries attached importance in the context of the negotiations, such as the question of non-reciprocity, special treatment for the least developed countries, the binding in GATT of preferential tariff margins, effective compensation in the case of the erosion of preferential margins resulting from MTN tariff cuts, recognition of the right of developing countries to accord export subsidies in the context of their development and industrialisation policies, the exemption of the developing countries from the application of safeguard measures, and the provision of differential treatment for the developing countries. Finally, the Group of 77 urged that immediate consideration should be given to reforming the provisions of GATT, including Part IV, in order to provide on a mandatory basis for differentiated and more favourable treatment to developing countries and for the extension of these principles to existing codes and those that might be drawn up in future. Following extensive consultations between the developing countries, the Conference called upon participants in the MTNs to ensure the full achievement of the objectives of the Tokyo Declaration, with special reference to the needs of the developing countries. Particular emphasis was placed on the need to give priority attention to tropical products and the situation of the least developed countries. In addition, the importance of the principle of nonreciprocity for developed countries in tariff reductions, the application of differential measures in favour of the developing countries, and the inclusion of all developing countries in the GSP, compensation for the erosion of

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preferential margins resulting from MTN tariff cuts, and the exemption of the developing countries from the application of safeguard measures were identified as necessary elements in the creation of an equitable system of trade and production. Finally, the Secretary-General of UNCTAD, as well as the UN Regional Economic Commissions, were requested to provide the necessary technical assistance to facilitate the participation of the developing countries in the negotiations.7 As can be seen, notwithstanding the fact that the developed countries had insisted that the MTNs should be carried out within the framework of the GATT and that UNCTAD should play a marginal role in the process, a number of the measures advocated by the Group of 77 were, in fact, embodied in the resolution adopted by the Conference. The difficulty was that, with the limited representation of the developing countries in the GATT, there was no guarantee that these principles would prevail in the negotiations, particularly since the developed countries showed a disposition to proceed with agreements among themselves which protected their interests while neglecting some of the major preoccupations of the developing countries. Regarding the third agenda item dealt with in Negotiating Group II, namely, the transfer of technology, the problem of technological dependence and the need to devise an appropriate strategy to strengthen the technological capacity of developing countries had received increasing attention prior to the Conference. The documentation prepared by the UNCTAD Secretariat for the Conference not only examined the nature and consequences of technological dependence but also identified a number of specific measures to strengthen the technological capacity of the developing countries and to govern the transfer of technology. Many of these measures were eagerly endorsed by the Group of 77 in the Manila Declaration and Programme of Action, including the establishment of a Code of Conduct for the Transfer of Technology and the revision of the international patent system. On this item8 the Conference recommended action to improve the infrastructure and capacity of the developing countries for the transfer of technology, the elaboration of preferential arrangements for the development and transfer of technology among developing countries, and the establishment of sub-regional centres for the development and transfer of technology. It was also recommended that developing countries should encourage the development of technology appropriate to their own needs. In addition, it was decided to establish an Advisory Service on the Transfer of Technology within UNCTAD. In terms of industrial property, the Conference reaffirmed that the process of revision of the Paris Convention for the protection of Industrial Property, as well as the Model Law for Developing Countries on Inventions, should take

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full account of the responsibilities and competence of WIPO and UNCTAD and should be guided by the need to improve conditions for the adaptation of technology as well as the development of indigenous technology. However, of the several measures dealt with under the agenda item, the proposal for the establishment of a Code of Conduct for the Transfer of Technology was the most controversial. While there was consensus on the need for such a Code, there was disagreement between the developed and the developing countries on the status of the Code, with the latter demanding a legally binding instrument and the former advocating a voluntary code that would be directed to both donor and recipient countries and institutions. In addition, the developed countries insisted that the transfer of technology should take account of existing contractual arrangements governing the ownership of technology and the confidentiality of technological information. In the end, the Conference decided9 to establish within UNCTAD an intergovernmental group of experts to elaborate the draft Code of Conduct the Transfer of Technology. It also recommended that the UN General Assembly should convene, by the end of 1977, a conference under the auspices of UNCTAD to negotiate the Code on the basis of the draft elaborated by the Group of Experts and to take the necessary action to ensure the adoption of a final document. The question of the legally binding character of the Code, which was the major source of contention, was deferred for consideration during the negotiating conference itself.

Money, Finance and the Transfer of Real Resources Despite the importance of the subject dealt with in this Group, its results were perhaps the most disappointing. The position of the developing countries on many of the issues under discussion was clearly articulated during the Seventh Special Session and was subsequently reaffirmed and elaborated in the Manila Declaration and Programme of Action which, among other things, proposed debt relief in the form of waivers or the postponement of interest payments, the consolidation of commercial debts and the rescheduling of payments, an increase in the transfer of resources to the developing countries, increased participation of the developing countries in the international monetary system, the adoption of special measures to meet the balance of payments deficit of MSA countries, and the establishment of a link between SDRs and development finance and increased consistency in exchange rate policies. In the period immediately preceding the Conference, the growing current account deficit of many non-oil-producing countries and their increasing indebtedness were already beginning to assume importance in the face of the

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declining terms of trade of these countries and the failure of Official Development Assistance (ODA) to keep pace with their development needs.10 It was estimated, for example, that the current account deficit of the non-oil producing countries had increased from approximately $11 billion in 1973 to about $45 billion in 1975. Similarly, the cumulative debt of the developing countries was in excess of $120 billion and was expected to increase even further. As in Negotiating Group I, the negotiations in this Group on the several issues proved extremely difficult. For example, on the crucial issue of debt relief, the developed countries refused to accept the need for a comprehensive solution to the problem as was proposed by the Group of 77. Instead, they urged a case-by-case approach to the problem, on the ground that the debt problems of the developing countries were not identical and that some countries were in need of greater and more urgent assistance than others. As a result of irreconcilable differences on a number issues, the resolution11 adopted by the Conference was not only limited to the debt problem but was also largely procedural in nature. Apart from welcoming the pledge by the developed countries to review within a multilateral framework individual requests for debt relief, particularly in the case of the LDCs and the MSAs, it requested the Trade and Development Board, at the ministerial meeting that was scheduled to be held in 1977, to review action taken in pursuance of the provisions of the resolution and also invited the Secretary-General of UNCTAD to convene a group of experts to assist in the task. The much more substantive draft resolution submitted by the Group of 77 on the debt problem, the transfer of real resources and balance-of-payments deficits of the developing countries had to be referred to the Trade and Development Board for consideration because of a lack of consensus, as were the draft resolutions on access to private capital markets, the transfer of resources, and measures to improve the international financial and monetary situation.

Least Developed Countries, Developing Island Countries and Land-Locked Developing Countries This Group set the pace for other Negotiating Groups since, at an early stage of the Conference, it achieved a wide measure of agreement on the issues, in spite of the fact that twenty of the sixty pages of the Manila Declaration and Programme of Action, excluding the appendices, were devoted to recommendations on this subject.

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By and large, the Manila Declaration and Programme of Action had endorsed many of the measures proposed in the document prepared by the UNCTAD Secretariat on the subject, including the expansion of financial assistance from bilateral and multilateral donor agencies to the three categories of countries. It was also recommended that preferential treatment should be granted to the imports of goods produced in the LDCs and that arrangements should be put in place to improve the transhipment facilities of the developing countries and to adopt promotional freight rates with a view to expanding their export trade. Similarly, it was proposed that special assistance should be provided to enable the developing countries, and particularly archipelagic states, to exploit their marine and sub-marine resources. In addition to the above, the Manila Declaration and Programme of Action had outlined a number of other measures of specific relevance to the landlocked developing countries. In particular, the developed countries and others in a position to do so were urged to contribute to the newly created UN Special Fund for Land-locked Developing Countries in order to compensate them for additional transportation costs made necessary by the special geographical characteristics of such countries. Despite disagreement between the developed and the developing countries on some issues, the conference was able to adopt a comprehensive set of measures in respect of the three categories of countries.12 In terms of the LDCs, the developed market economy countries were urged, among other things, to increase the flow of the ODA to these countries. In addition, they were urged to provide support for the Special Fund for LDCs. However, on this point some developed countries, most notably the USA and the Federal Republic of Germany expressed reservations regarding the need for such a Fund, and continued to express a preference to channel their assistance to the LDCs through existing bilateral and multilateral institutions. It was proposed that the developed countries should cancel official debts and also give immediate consideration to providing highly concessional terms of relief for the other outstanding debt of the LDCs, as indeed for the developing island countries and the land-locked developing countries. Multilateral financial institutions were also requested to convert loans to the LDCs on highly concessional terms. However, because of the reluctance of the developed countries to accept the proposals regarding the treatment of debt, the relevant paragraphs were remitted to the permanent machinery of UNCTAD for consideration. In general, the measures in the resolution relating to the LDCs paralleled those contained in other resolutions adopted by the Conference on the several agenda items, but placed special emphasis on the need for preferential treatment to be accorded to these countries. Of course, since the 1970s increased attention

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has been paid to the needs of the LDCs, as is reflected in a series of conferences focusing on the needs of these countries, the most recent of which was held in Brussels in May 2001. In the case of the developing island countries, the developed countries were requested to invite ship owners and members of conference lines to establish freight rates designed to encourage the exports of these countries and also promotional rates for non-traditional exports. Special research was urged in order to develop appropriate types of ship and shore facilities. In addition, assistance was requested for the development of appropriate airport facilities, as well as for the development of telecommunications and marine and submarine resources. Finally, UNCTAD was requested to convene a meeting of experts on feeder and inter-island services by sea and air. As in the case of the LDCs and island-developing countries, special measures were also urged in favour of the land-locked developing countries in order to assist in offsetting their geographical disadvantage in terms of lack of access to the sea and their remoteness and isolation from markets. The development of suitable transport infrastructure was specifically emphasised, as was cooperation in the development of air transport. UNCTAD was requested to prepare proposals for the Special Fund for Land-locked Countries. Although this last proposal was accepted without a vote, some developed market economy countries made explanatory statements in which they expressed their preference to assist landlocked countries through existing bilateral and multilateral mechanisms rather than through a new fund. With respect to the measures pertaining to the land-locked developing countries, paragraph 84 of the Manila Declaration and Programme of Action which dealt with access of the land-locked developing countries to the sea, generated considerable controversy. In the Manila document, paragraph 84 affirmed the ‘right of access’ of land-locked countries. But the same paragraph recorded the reservations of several developing countries which took the position that, although the land-locked developing countries should be granted access through transit countries on a purely voluntary basis and under specially agreed bilateral arrangements, they could not concede an international legal right of access since such a concession would compromise the sovereignty of transit countries. In the end, the paragraph which appeared in the Manila text was reproduced in the final resolution adopted in Nairobi but only after heated debate and controversy in the Negotiating Group. In their interpretive statement on the resolution, the Group B countries expressed the view that the question of ‘free access to and from the sea’ which was dealt with in paragraph 97 of the resolution was not properly within the purview of the conference, thus implying that it was a matter for discussion in the context of the Law of the Sea Conference.

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Some controversy also arose during the course of the negotiations on this resolution regarding the application of several of its provisions to the developing island countries as a whole, since the Group B developed countries contended that some of these countries, such as Singapore and Trinidad and Tobago, had comparatively high per capita incomes and, therefore, not all developing island countries should be treated in the same manner. More fundamentally, the developed countries argued that, as a category, the situation of the developing island countries which inluded countries at varying levels of economic development should be treated differently from the other two categories, namely, the LDCs and the land-locked developing countries, which generally were at a lower level of development and therefore faced special disadvantages. The delegate of the then Federal Republic of Germany, who served as the spokesperson of the Group B countries on the issue, was particularly insistent on this point.

Economic Cooperation Among Developing Countries (ECDC) This agenda item was allocated to Negotiating Group IV but was in fact discussed in a separate drafting Group of the Conference.13 In preparation for the Conference, the Group of 77 had adopted a comprehensive resolution on the subject which was included in an annex to the Manila Declaration and Programme of Action. In addition, the UNCTAD Secretariat had prepared two important reports14 which outlined a number of measures that could be adopted to strengthen ECDC. During the discussions in the Drafting Group, the spokesman for the Group of 77 took the position that the programme of ECDC adopted in Manila was not negotiable and, therefore, only the support to be provided to the programme by the developed countries and international organisations should be examined in the Drafting Group. This interpretation was supported by the Chairman of the Drafting Group and was accepted by Group B and Group D. It was on the basis of this understanding that the Drafting Group proceeded to examine the agenda item. The resolution15 adopted by the Conference provided for a number of support measures for programmes of ECDC by both the developed market economy countries and the socialist countries of Eastern Europe in specific areas, including assistance in setting up multinational ventures, the reduction of the interest cost on loans to recipient developing countries and support for preferential trading arrangements among developing countries. The expansion of existing and the creation of new export finance and guarantee schemes by the World Bank and regional and sub-regional development banks and the

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provision of technical assistance for setting up and operating state import and export enterprises were also identified as important elements in the promotion of a viable programme of ECDC. In addition, international financial institutions were required to support ECDC programmes through the creation of preinvestment funds for the preparation of multinational investment projects and the provision of loan funds for such projects. Finally, the UN System, and in particular UNDP, was requested to allocate a larger proportion of its technical assistance resources to ECDC projects, while the UNCTAD Secretariat was requested to expand its role as executing agency for such projects. Regarding support for preferential trading arrangements among the developing countries and other similar measures in furtherance of the objectives of ECDC, the US, while welcoming the resolution, stipulated that its own support would be provided on the condition that the action on the part of the developing countries was consistent with their international obligations. This was a clear attempt to ensure that ECDC did not contradict the principles regarding the preservation of a liberal and open international trading system embodied in the GATT. Moreover, Group B as a whole stated that their support for export credit finance and guarantee schemes would be forthcoming only if the findings of the proposed studies on these subjects justified such support. It should be mentioned that, in the context of their deliberations in Nairobi, the Group of 77 endorsed Mexico’s proposal that a meeting of experts on ECDC should be held in Geneva in July 1976, in preparation for the intergovernmental meeting to be held in Mexico City in September 1976, as was agreed by the third ministerial meeting of the Group in Manila. It is also relevant to note that Mexico’s initiative in seeking to host the conference on ECDC in September 1976, provoked some debate among the developing countries regarding the level of representation and timing of the Conference in view of the fact that the Non-Aligned Summit was due to be held in Colombo in August of the same year. A number of Non-Aligned countries were opposed to the holding of a high-level ministerial meeting, as the Mexican delegation had proposed, and preferred instead a lower level technical meeting. Moreover, some Non-Aligned countries suggested that the conference might be ill-timed, coming so soon after the Colombo Summit. Mexico was, however determined to ensure the highest level of representation since the conference was timed to coincide with the formal opening in Mexico of the Centre for the Study of Third World Economic and Social Problems (CEESTEM).

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Trade Relations Among Countries having Different Economic and Social Systems and Institutional Issues The document which was prepared for the Conference by the UNCTAD Secretariat, in keeping with the decision of the Trade and Development Board at its fifteenth session to include this subject on the agenda of UNCTAD IV, examined a wide range of multilateral action aimed at expanding trade and economic relations between countries with different economic and social systems and, in particular, action which would contribute to the development of developing countries. In the Manila Declaration and Programme of Action, the Group of 77, in following up this initiative also identified a number of measures designed to strengthen the relations between the socialist countries and the developing countries. The actual negotiations on this agenda item during the Conference were largely non-controversial, although China accused the Soviet Union of seeking to make the developing countries dependencies of ‘social imperialism’ – a term which China had traditionally used to describe the policies of the Soviet Union. The decision16 adopted by the Conference provided for a number of measures to expand economic cooperation among the developing countries, the socialist countries of Eastern Europe and the developed market-economy countries. In pursuance of these objectives, the socialist countries were invited, inter alia, to expand and improve their systems of generalised preference with respect to the products of vital importance to the developing countries. In addition, they were invited to give due consideration to the trade needs of the developing countries during the formulation of their national development plans, particularly with a view to increasing the volume of imports from the developing countries. The members of the Council for Mutual Economic Assistance (CMEA) – an economic organisation of the socialist bloc – were also invited to promote an increased flow of information on the Special Fund of the International Investment Bank in order to improve cooperation between the Bank and the developing countries. Finally, the Secretary-General of UNCTAD was requested to convene an intergovernmental group of experts to evaluate the results of his consultations with CMEA regarding trade opportunities and to make recommendations to the Trade and Development Board which was also requested to convene, during its regular session, sessional committees to study the problems associated with the promotion of trade and economic relations between the developing countries and the socialist bloc countries. During the negotiations on this agenda item, it was evident that while a small number of developing countries with a socialist bent placed considerable emphasis on the promotion of closer economic relations with the socialist

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bloc countries, the majority of the developing countries viewed this relationship as peripheral and continued to focus instead on that between the developing countries and the developed market-economy countries which they saw as central to the creation of a new international economic order. This attitude was, in part, encouraged by the traditional tendency of the socialist bloc countries to deny any historical responsibility for colonialism, and therefore, to seek to minimise their obligations to promote the development of the developing countries. The socialist bloc countries, for their part, tended to see the strengthening of their relations with the developing countries as a means of detaching the latter from what was considered to be a dependent relationship with the world capitalist system. It is clear, however, that, ideology apart, the rational and balanced integration of the socialist bloc countries into the international economic system constituted an important objective of the new international economic order. The review of the institutional arrangements within UNCTAD as well as its role in the overall UN system, which was dealt with in Negotiating Group V, assumed increased importance against the background of the demand for restructuring the social and economic sectors of the system to facilitate the achievement of the objectives of the New International Economic Order and the appointment of an Ad Hoc Committee of the General Assembly to carry out the task of restructuring. During the mid-1970s, there was also a growing recognition of the need for the establishment of an effective negotiating machinery within the UN system to deal with the complex issues of trade and development, with a view to translating general declarations and principles into concrete and specific programmes of action. In recognition of this need, the Group of 77 had urged that the decision-making and negotiating capacity of UNCTAD should be strengthened and that its name should be changed to describe more accurately its character as the organisation within the UN system responsible for deliberation, negotiation and review in the field of international economic cooperation and also as a step towards the final objective of creating a comprehensive world trade organisation which, it will be recalled, was one of the goals originally envisaged in the Havana Charter of 1947. It should be pointed out that the report17 of the Group of Experts, who examined the question of restructuring of the UN system had tended to see a restructured ECOSOC serving as a major negotiating forum for economic and social issues, but the Group of 77 was inclined to vest this function instead in UNCTAD, with its universal membership, acting under the overall supervision of the UN General Assembly which was seen as being responsible for providing the broad political guidelines for the negotiations.18

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In the documentation submitted to the Conference on the subject, the UNCTAD Secretariat had itself made a case for the strengthening of UNCTAD to enable it to serve as the specialised arm of the UN General Assembly in the field of trade and development. It recommended, among other things, the delegation to the Secretariat of greater administrative and budgetary flexibility, an expansion of the membership of the Trade and Development Board, a rationalisation of the work of the main committees of the Board and the greater use of expert groups, which it was felt served a useful purpose in advancing intergovernmental understanding and agreement. As it turned out, the Conference endorsed most of the proposals advanced by the Group of 77 and the UNCTAD Secretariat on the subject.19 It was decided, for example, to invite the General Assembly, in carrying out the process of restructuring, to bear in mind the need to strengthen the role of UNCTAD and to increase its effectiveness as an organ of the Assembly for deliberation, negotiation, review and implementation in the field of international trade and development. It also recommended that the Secretariat should be provided with greater flexibility in budgetary, financial and administrative matters in order to enable it to carry out its responsibilities more effectively. In terms of the operations of the Trade and Development Board, it was recommended that membership of the Board should be open to all member states of UNCTAD. It was also agreed that the Board should meet at the ministerial level every two years between sessions of the Conference itself. The Board was urged to introduce greater flexibility in its operations and also to rationalise the structure of its committees and subsidiary bodies. In pursuance of the decisions on ECDC, the Board was requested to establish an open-ended Committee on ECDC to provide support and assistance to the developing countries in their effort to promote economic cooperation among themselves. The Group B developed market-economy countries, while supporting the provisions of the resolution, reaffirmed their position that its implementation should not affect the independence of the GATT and the IMF which they still considered to be the major instruments for the articulation of international trade and monetary policy. Similarly, the group D socialist countries stated that the restructuring of UNCTAD should be carried out without prejudice to the integrity of the Charter and the position of the UN General Assembly and ECOSOC.

General Observations The negotiations which took place during UNCTAD IV have been dealt with at length, since the Conference provided the first real opportunity for the

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international community to seek to translate the broad principles of the New International Economic Order into a concrete programme of action through a process of negotiations. As it turned out, however, the negotiating position of the developed countries had become much tougher since the conclusion of the Seventh Special Session which had managed to achieve a tenuous consensus on the need for change in the international economic system. This was particularly evident in the case of the United States, the Federal Republic of Germany, Japan and, on certain issues, France. The stance adopted by the developed countries almost produced a total absence of agreement on the major issue before the Conference, namely, the integrated programme on commodities, including the Common Fund, which, notwithstanding any agreement on other issues, would have signalled the failure of the Conference. Last-minute compromise led to an agreement which, although not fully acceptable to the developing countries, did go some way towards meeting some of the objectives they advocated. There are a number of features of the Conference which merit special comment. Firstly, the Group of 77 was able to maintain its unity throughout the Conference, which proved to be an important asset during the negotiations with the developed countries. Under the able and effective leadership of its Chairman, the Group met frequently to resolve difficulties which arose among its regional groups as well as in the negotiations with the developed countries. This stood in marked contrast to the experience that was to occur later, in UNCTAD V, during which the regional groups tended to meet to the virtual exclusion of the wider Group of 77. Secondly, a number of non-governmental organisations (NGOs) from the developed countries, which were present in Nairobi, were very supportive of the positions adopted by the developing countries during the Conference. These organisations proved very effective, through the publication of bulletins and other news sheets, in bringing pressure to bear on the developed countries. This was particularly true in the case of the negotiations on the integrated programme on commodities and the Common Fund which were seen by the NGOs as the cause celebre of the Conference and as a test of the good faith of the developed countries in working towards the creation of a new international economic order. Thirdly, the UNCTAD Secretariat played a critical role in enabling the participants to focus on the several issues before the Conference by providing competent analyses on the various agenda items. In fact, the influence of the Secretariat’s formulations was evident in many of the resolutions adopted by the Conference. As far as the developing countries were concerned, this was a boon since the formulations tended, in large measure, to reflect the interests of

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the developing countries even though it is also true that some of the measures adopted by Conference on this basis contributed to an expansion of the bureaucratic structure of the secretariat itself. In terms of the outcome of the Conference, the expectations that greater progress could be achieved in the specialised fora of the UN system instead of the highly politicised context of the General Assembly was not borne out by the experience of UNCTAD IV. The critical factor was not so much the type of forum in which the negotiations were conducted, but rather the willingness of the developed countries to concede fundamental changes in the international economic system. It had, therefore, become quite clear that the struggle for a new international economic order would be long and difficult and that the new order would certainly not be achieved overnight, if at all.

The Conference on International Economic Cooperation (CIEC) The CIEC was the result of efforts by the developed countries to transfer the discussion of international economic issues from the United Nations system to a more limited forum outside the system, in order to escape the ‘tyranny of the majority’ exercised by the developing countries within the United Nations system by virtue of the universal and democratic character of the organisation. Proposed initially by President Giscard D’Estaing of France as a dialogue on energy problems between the developed countries members of OECD, and the oil-producing members of OPEC, with the selective participation of some non-oil-producing developing countries, the Conference was subsequently broadened, at the insistence of the developing countries, to cover other subjects such as raw materials, finance and development, in addition to energy. Moreover, representation at the Conference was increased in order to ensure wider participation, particularly of the developing countries. The report on the preliminary meeting held in Paris in October 1975 in preparation for the Conference, which was submitted to the General Assembly during its Thirtieth Session, provoked considerable controversy both in relation to the representation of the developing countries at the Conference and the nature of the relationship that the Conference should bear to the General Assembly. Some developing countries felt that the ‘Paris Conference’ (as it was sometimes called) represented a potentially dangerous tendency since it sought to settle important international economic issues outside the framework of the United Nations system and, further, that it could perhaps also encourage an accommodation between the developed countries and the oil-producers to the

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detriment of the solidarity of the developing countries. This view was held particularly by those developing countries not represented at the Paris Conference. A number of other developing countries felt, however, that the Paris Conference represented an important initiative since it was the first time that the developed countries had agreed to seriously negotiate controversial international economic issues and, therefore, the opportunity to do so should not be missed by the developing countries. It was this latter view that prevailed in the end within the Group of 77. In addition, a formula was adopted to ensure that the decisions of the Conference did not affect the primacy of the United Nations General Assembly in the discussion of international economic issues. In accordance with the formula agreed by the UN General Assembly, the participating countries in the Paris Conference were requested to ensure that their deliberations and decisions took full account of the principles and policy decisions adopted within the United Nations and, in particular, the resolutions adopted at the twenty-fifth session of the Assembly on the International Development Strategy for the Second United Nations Development Decade; the resolutions of the Sixth Special Session on the New International Economic Order; the Charter of Economic Rights and Duties of States adopted during the Twenty-Ninth Session; and the resolution of the Seventh Special Session on Development and International Economic Cooperation. In addition, the Paris Conference was invited to report its conclusion to the General Assembly at its Thirty-First Session, while the UN Secretary General was also requested to submit to the Assembly, through the Economic and Social Council (ECOSOC), a report on his participation in the Conference. On the question of representation at the Conference, which it had been agreed would comprise participants from 19 developing countries and eight developed (market-economy) countries (with the EEC representing its members), the Group of 77 agreed to add another 12 developing countries to join the original seven, namely, Algeria, Brazil, India, Iran, Saudi Arabia, Venezuela and Zaire, which had participated in the preparatory meeting in October 1975. The additional 12 developing countries selected were Argentina, Egypt, Indonesia, Iraq, Jamaica, Mexico, Nigeria, Pakistan, Peru, the United Republic of Cameroon, Yugoslavia and Zambia.20 As can be seen, this selection guaranteed substantial representation of the oil-producing (OPEC) countries which were perceived as critical to the dialogue, both in terms of the economic leverage which they exercised during the mid-1970s as a result of their control of an important resource and the need to ensure that they were locked into any agreements that might result from the Conference.

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The opening ministerial session of the Conference, which was co-chaired21 by a representative from each of the two groups of participating countries, namely, the developed and the developing countries, was held in Paris from December 16–19,1975. This was followed by a meeting on January 26 and 27, 1976, of the co-chairmen of the Conference and of the four commissions appointed to deal with the substantive issues before the Conference, namely, energy, raw materials, development and finance, which reviewed the preparations for carrying out the work of the commissions. The commissions, which comprised 15 members (five from the developed countries and ten from the developing countries) chaired by two co-chairmen22 designated by each of the two groups of countries represented at the Conference, held four sessions23 during the first half of 1976 and carried out a comprehensive analysis of the various issues. This so-called ‘analytical’ phase of the Conference was followed by a more ‘action-oriented’ phase in the second half of 197624 during which the commissions sought to arrive at agreement on concrete proposals which could be endorsed by the ministerial meeting of the Conference which was scheduled to take place in December 1976 but which was subsequently postponed to May 1977. During the course of the Conference, the developed countries sought greater assurance on supplies of energy and raw materials from the developing countries, while the latter sought improvement in their terms of trade, access to the markets of the developed countries for their exports, debt relief and an increased flow of capital and technology from the developed countries to facilitate the diversification of their economies. The OPEC countries were especially interested in obtaining technology from the developed countries to enable them to establish ‘down stream’ industries based on their oil resources, such as petrochemicals and fertilisers, while seeking to resist pressures from the developed as well as other developing countries to limit increases in oil prices. The final ministerial session of the Conference, which was held from May 30 to June 2, 1977, adopted a report which indicated general agreement on a number of issues, but which also explicitly acknowledged failure to agree on other issues considered by the developing counties to be of critical importance to any effort to restructure the existing international economic system. In the case of energy, there was agreement on the need to make energy available on commercial terms. However, there was general recognition of the depletable nature of oil and gas and the need for the international community to make a transition to more permanent and renewable sources of energy. Consequently, it was agreed that efforts should be made to develop all forms of energy while promoting conservation and increased efficiency in its utilisation.

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In order to achieve this objective, action at the national level as well as international cooperation in the energy field was advocated. There was, however, no agreement on such controversial issues as energy pricing; the accumulated revenues from oil exports; financial assistance to bridge the external payments problems of oil-importing countries; and the disposition of resources of the sea-bed which it was argued fell within the jurisdiction of the Law of the Sea Conference. In terms of raw materials and trade, within the framework of the integrated programme on commodities, measures were advocated in support of natural products facing competition from synthetics and also to assist developing countries to develop and diversify their indigenous natural resources. Improvements were urged in the GSP schemes of the developed countries and also the identification of areas for granting more favourable treatment for developing countries in the Multilateral Trade Negotiations (MTNs). Most important, however, was the expression of general support for the establishment of a Common Fund within the framework of the integrated programme on commodities which represented a significant step forward, given the previous unwillingness on the part of the major developed countries to support the establishment of the Fund. No agreement was reached on issues such as the maintenance of the purchasing power of the developing countries, compensatory financing, certain aspects of local processing and diversification. Similarly, there was no consensus on measures in support of the interests of developing countries in world shipping, control over the production of synthetics, measures for protecting the interests of those developing countries which might be adversely affected by the implementation of the integrated programme on commodities, nor on some of the measures related to trade policies, the institutional framework of trade and certain aspects of the GSP and MTNs. The agreed measures in the broad field of development dealt with an increase in the volume and quality of ODA and the provision by the developed countries of $1 billion under a special action programme for individual low income countries facing the problem of transfer of resources. Measures were advocated to increase food and agricultural production and also to improve infrastructure, particularly in Africa. In addition, the accelerated industrialisation of the developing countries and the transfer of technology to these countries were identified as important priorities. In contrast, the Conference could not agree on the provision of relief for the indebted developing countries, adjustment assistance measures, certain aspects of the access to the markets of the developed countries for manufactures and semi-manufactures nor on the role of transnational corporations.

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The agreements in the area of finance covered certain aspects of foreign direct investment, access to capital markets, financial flows, and cooperation among developing countries. However, no agreement could be reached on the criteria for compensation, the transfer of profits and the terms of the settlements of disputes, measures against inflation, and the financial assets of the oilexporting countries. While the developing countries participating in the Conference conceded that some effort had been made during the Conference to meet their needs, they expressed disappointment that most of the proposals relating to structural change in the international system and other measures to deal with the urgent problems of the developing countries, had not been agreed. The developing countries felt, therefore, that the Conference had fallen short of the objectives that had been envisaged. The developed countries, on the other hand, although expressing regret that it had not been possible to reach agreement on a number of important issues, welcomed the spirit of cooperation realised during the Conference. In general, however, the participants in the Conference saw it as a part of an on-going dialogue between the developed and the developing countries which was to be continued in other fora. Some commentators have sought to explain the ‘failure’ of the Paris Conference in terms of attitudinal factors such as the existence of a ‘conceptual gap’ between the developed and the developing countries in relation to the issues discussed, ‘differences in levels of expectation’, as well as ‘differences in negotiation strategies’ between the two sides.25 But while these considerations are relevant, the fundamental issue turned mainly on the relative power positions of the developed and developing countries, with the former clearly having the upper hand in the negotiating process that was conceived largely within the traditional vertical North-South framework of international relations and with the further handicap that participation was restricted to a comparatively small number of countries. In the aftermath of the Conference, there continued to be considerable difference of opinion between the developed and the developing countries in their assessment of its results. The developed countries regarded the Conference as a qualified success in that it provided an opportunity for an in-depth consideration of a number of important issues of concern to the international community, while the developing countries saw it largely as a failure since it had not yielded solutions to the problems that were at the heart of their demand for a new international economic order. For this reason, the resumed ThirtyFirst Session of the UN General Assembly, which had previously been adjourned for the specific purpose of reviewing the report of the Conference, failed to arrive at a consensus on the question and consequently concluded without taking a decision.

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Restructuring of the Economic and Social Sectors of the UN System The establishment of the Ad Hoc Committee on the Restructuring of the Economic and Social Sectors of the UN system was an integral part of the resolution26 adopted during the Seventh Special Session of the UN General Assembly. In keeping with the relevant provisions of the resolution, the Committee was required to prepare detailed proposals designed to make the UN system more responsive to the requirements of the Declaration and Programme of Action on the New International Economic Order and the Charter of Economic Rights and Duties of States. In carrying out its work, the Committee was requested to take into account a number of relevant documents, including the report of the Group of Experts on the Structure of the UN system entitled ‘a New United Nations Structure for Global Economic Cooperation’.27 The Committee met initially in November 1975 and held three other meetings in 1976. However, of the eight ‘problem areas’ identified for consideration during these meetings on the basis of proposals put forward by various delegations, the Committee was able to complete consideration of only five areas prior to the Thirty-First Session of the General Assembly to which it was required to submit its report in accordance with the relevant provisions of resolution 3362 (S-VII). Consequently, the General Assembly decided to extend the mandate of the Committee in order to enable it to submit a complete report to the Thirty-Second Session. Following the extension of its mandate, the Committee held two sessions in 1977 during which its work was conducted mainly through an informal ‘Contact Group’ presided over by the Chairman of the Committee. The Group focused mainly on the remaining problem areas, namely, inter-agency coordination; operational activities of the UN system; and secretariat support services, including the proposal for the appointment of a Director-General for Development and International Economic Cooperation, and was able to progressively narrow the areas of disagreement between the developed and the developing countries. Agreement was facilitated by the appointment of the so-called ‘Friends of the Chairman’, comprising a small group of delegations from both the developed and the developing countries, which proved effective in resolving difficulties which emerged during the course of negotiations in the Committee. The Committee was therefore able to adopt, on December 14, 1979, a number of agreed conclusions and recommendations.28 The specific conclusions and recommendations of the Committee dealt with eight main subject areas, namely, the General Assembly; the Economic and Social Council (ECOSOC); other United Nations fora for negotiations,

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including UNCTAD and other UN organs and programmes, the specialised agencies, the International Atomic Energy Agency (IAEA) and Ad Hoc World Conferences; structures for regional and interregional cooperation; operational activities of the UN system; planning, programming, budgeting and evaluation; inter-agency coordination; and secretariat support services. In terms of the General Assembly, the Committee recommended that, as the supreme organ in the UN system in the economic and social fields and as the principal forum for the harmonisation of international action in these fields, the Assembly should concentrate on overall strategies, policies and priorities for the system as a whole in the area of international economic cooperation, although it might assign to other fora within the UN system the responsibility for negotiating and submitting recommendations for action in specific areas. Specific measures were also suggested for the rationalisation of the methods of work and procedure of the Assembly in the economic and social fields, including the allocation of agenda items in such a way as to achieve a balanced and efficient distribution of items between the Second and Third Committees and the promotion of greater coordination between the Second and Third Committees on the one hand, and between these two committees and the Fifth Committee, on the other. It was also recommended that discussions in the Second Committee (which dealt with economic and financial issues) should focus on individual agenda items or groups of items and should concentrate, as far as possible, on proposals submitted under these items. This recommendation was specifically designed to put an end to the extensive general debate which had traditionally taken place during the early meetings of the Second Committee which was not only tedious and repetitive but also reduced the time available in the Committee for the detailed consideration of resolutions. In terms of the general thrust of the recommendations relating to the Assembly, it was evident that, against the background of the resolution adopted at the Thirtieth Session, which asserted that in future the negotiations on international economic issues should take place within the UN system, the developing countries were determined to ensure that the exercise in restructuring should reinforce the authority of the Assembly vis-à-vis other organs of the system. The recommendations on ECOSOC, which were the subject of much debate, were fairly comprehensive in scope and sought to delineate the functions of this body vis-a-vis those of the Assembly. It was recommended that the Council should serve as the central forum29 for the discussion of international economic and social issues of a global and inter-disciplinary

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nature and for the formulation of policy recommendations on these issues addressed to member states and the United Nations system as a whole. It was also required to monitor and evaluate overall strategies, policies and priorities established by the Assembly in the economic, social and related fields and ensure the coordinated implementation of relevant policy decisions and recommendations emanating from UN conferences and other fora within the UN system. A number of recommendations were aimed at the rationalisation of the structure, functions and procedures of the Council. It was proposed, for example, that the Council should organise its work on a biennial basis and provide for shorter but more frequent subject-oriented sessions. In addition, the Council was required to assume, to the maximum extent possible, direct responsibility for performing the functions of its subsidiary bodies as well as its expert and advisory bodies, which would, in turn, be discontinued, unless the Council took action to redefine their mandates and, where appropriate, set deadlines for the completion of their activities. The Council was also requested to streamline its standing intergovernmental committees, redefine the terms of reference of its functional commissions and assume direct responsibility for carrying out the preparatory work of ad hoc conferences convened by itself or by the General Assembly. In terms of its membership, it was recommended that all member states of the UN should be enabled to participate in its work to the maximum extent possible. Consideration was also to be given to ways and means of making the Council fully representative and also to a possible increase in the membership of its reconstituted subsidiary bodies. The extensive treatment of the structure and functions of the Council reflected, on the one hand, a preoccupation on the part of the developed countries to strengthen its role in the system in dealing with economic and social issues and, on the other, an equal concern on the part of the developing countries not only to democratise its membership, but also to ensure that no presumption was created that, in the economic and social spheres, the Council possessed powers equal to those of the General Assembly or that the Assembly had by convention delegated such functions to the Council. In fact, the developing countries, while conceding that the Charter conferred specific powers on the Council, asserted that in all such areas the Assembly possessed these powers in greater plenitude. In commenting on the nature of the relationship between ECOSOC and the General Assembly, it is important to note that, unlike the case of its political counterpart, the Security Council, the developed countries do not possess a veto in ECOSOC and therefore, a defence of its limited membership was to some extent seen by the developed countries as a compensation for this original

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omission. The truth is that, at the time of the formation of the United Nations, international economic issues were not accorded the same degree of importance as political and security concerns and, therefore, the developed countries did not see the need to insist on the exercise of a veto power in ECOSOC. The effort of the developed countries during the negotiations in the Ad Hoc Committee was in the nature of a rearguard action to preserve the somewhat exclusive character of ECOSOC. All the other UN fora for negotiations, including UNCTAD and other UN organs and programmes, the specialised agencies, IAEA and ad hoc world conferences which were the subject of the third major set of recommendations by the Committee, were required to cooperate with the General Assembly and ECOSOC in order to give effect to their policy recommendations. These bodies were also to be guided by the overall policy framework established by the Assembly for deliberation, negotiation, review and implementation in the field of international trade and related areas of international economic cooperation. In addressing structures for regional and interregional cooperation, it was proposed that the regional commissions should serve as the main economic and social development centres within the UN system for their respective regions, having regard to the role of the specialised agencies and other UN bodies in specific sectoral fields and the coordinating role of the United Nations Development Programme (UNDP) in respect of technical cooperation activities. The commissions were also to exercise team leadership and responsibility for coordination and cooperation at the regional level. The establishment of close collaboration between the regional commissions and UNDP was also recommended. In this connection, it was proposed that the commissions should be enabled to participate actively in operational activities, including the preparation of inter-country programmes. In addition, the General Assembly and ECOSOC were requested to adopt the necessary measures to enable the commissions to function as executing agencies for projects in areas which did not fall within the province of the sectoral responsibility of the specialised agencies and other UN bodies. In an effort to promote inter-regional cooperation, the regional commissions were requested to expand cooperation among themselves, including the exchange of information and the convening of periodic inter-secretariat meetings. Finally, in order to enable the commissions to carry out their responsibilities effectively, it was recommended that the necessary authority should be delegated to them and also adequate budgetary and financial arrangements instituted. It should be mentioned that the African countries were very strong in their support for a strengthening of the role of the regional commissions in

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view of the fact that membership of the Economic Commission for Africa (ECA) was composed exclusively of developing countries. However, the situation was somewhat different in the case of the Economic Commission for Latin America and the Caribbean and the Economic Commission for Asia and the Pacific in which developed countries also participated. Consequently, some developing countries in these regions were less unequivocal in their support for the measures proposed by the Committee. Moreover, in the case of Latin America and the Caribbean, pressures for greater decentralisation of the functions of the commission at the subregional level, particularly in the case of the Caribbean, proved to be another complicating factor. It was agreed that the measures relating to the operational activities of the UN system should be designed to achieve specific objectives, namely, an increase in real resources for such activities on an assured and predictable basis. The important principle that the provision of assistance should be in keeping with the development objectives and priorities of the recipient countries, long defended by the developing countries, was also asserted, as was the need for the reorientation of activities and the allocation of resources to reflect the overall priorities of the General Assembly and ECOSOC. Within this overall framework, a number of specific measures were proposed, including the gradual integration of existing UN programmes and funds for development financed by extra-budgetary resources, while preserving the aims and objectives of each programme, the convening of a single pledging conference for operational activities, subject to the earmarking of contributions for specific programmes, and the utilisation of the UNDP country programming process as a frame of reference for operational activities carried out and financed by UN organisations from their own resources. In addition, it was agreed that a single UN official30 should be designated to provide team leadership and to evolve, at the country level, a multidisciplinary dimension to sectoral development assistance programmes and with responsibility for the overall coordination of operational activities. Agreement on this area of the work of the Committee was held up for a considerable period of time because of the insistence by some developing countries, most notably Argentina and Malta, that measures for the greater integration and coordination of operational activities should be conceded only after receiving a clear and unequivocal commitment from the developed countries to increase their contributions for the purpose of financing operational activities. This was an undertaking that the developed countries were not prepared to give without considerable qualification. The recommendations by the Committee in the areas of planning, programming, budgeting and evaluation were designed to improve the performance of these functions within the UN system. As such, the

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recommendations focused particularly on the operations of the Committee for Programme and Coordination (CPC), the Advisory Committee on Administrative and Budgetary Questions (ACABQ) and the Administrative Committee on Coordination (ACC). The CPC, as the main subsidiary organ of ECOSOC, was requested to assist the Council and the General Assembly in carrying out evaluation exercises in respect of the activities of the UN system and make recommendations regarding the establishment and harmonisation of mediumterm plans. It was also requested to formulate recommendations on the relative priority of UN programmes. It was proposed that the size of the ACABQ should be increased to at least 16 in order to ensure equitable representation in the interest of the developing countries. In addition, the need for close cooperation between CPC and ACABQ was specially emphasised. In the area of inter-agency coordination, it was recommended that, at the intergovernmental level, such coordination should be governed by the policy guidelines, directions and priorities established by the General Assembly and ECOSOC. It was felt that at the inter-secretariat level, such coordination should focus on the preparation of concise action-oriented recommendations for consideration by the intergovernmental bodies concerned; ensuring the coordinated and effective implementation by the UN organs, programmes and agencies of policy guidelines, directives and priorities emanating from the General Assembly and ECOSOC and developing cooperation and joint planning as well as the coordinated execution of programme activities decided upon at the intergovernmental level. Within this overall framework of inter-secretariat coordination, special emphasis was placed on the ACC. It was recommended that ACC should be streamlined and reduced to a minimum and that maximum use should be made of flexible ad hoc arrangements designed to meet the specific requirements of intergovernmental bodies and geared to the policy-making and programming processes of the General Assembly and ECOSOC. The agenda, functioning and reporting systems of ACC were also to be adjusted to respond fully and promptly to the priority concerns of the General Assembly and ECOSOC. More generally, the review by ECOSOC of the relationship agreements between the UN and the specialised agencies was to be guided by the need to ensure that the agencies gave full and prompt effect to the recommendations of the General Assembly and ECOSOC for the coordination of these policies and activities. Moreover, the powers of the Assembly were to be fully exercised in order to promote system-wide coordination, particularly in terms of the establishment of priorities and in relation to administrative and budgetary issues.

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The recommendations on secretariat support services, like those on operational activities and the definition of the role of ECOSOC, were the product of intensive negotiations in the Committee between the developed and the developing countries. When agreement was finally reached, it was determined that the recommendations of the Committee should be seen as guidelines to be implemented by the Secretary-General in the exercise of his powers under the Charter. In terms of its specific conclusions and recommendations, the Committee identified six basic functions to be carried out by the Secretariat, namely, (a)

(b)

(c)

(d)

(e)

(f)

carrying out interdisciplinary research and analysis, preparing concise and action-oriented recommendations on the basis of inter-sectoral analyses and syntheses of development issues and identifying and bringing to the attention of governments economic and social issues of international concern; the preparation of cross-sectoral analyses of economic and social programmes and plans of the UN system with a view to mobilising and integrating, at the planning and programming stages, the inputs and expertise of the organisations of the UN system in support of the implementation of policy guidelines, directives and priorities emanating from the General Assembly and ECOSOC; the provision of substantive support for technical cooperation activities in the economic and social sectors not covered by other UN organs, programmes and specialised agencies; the management of technical cooperation activities carried out by the UN in respect of projects under the regular programmes of technical assistance, UNDP projects for which the UN is the executing agency, and projects financed by voluntary contributions, including funds-intrust; the provision, on an integrated basis, of technical secretariat services for the Committee for Programme and Coordination (CPC), ECOSOC, the General Assembly and ad hoc conferences and intersecretariat coordination machinery; and, finally, research, including the collection of relevant data, and analysis in those economic and social sectors that do not fall within the purview of other UN organs, programmes and specialised agencies.

It was decided that the first and second functions identified should be clustered together on the basis of a programme of phased implementation. Similarly, the third and fourth functions were also to be grouped together as a

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separate organisational entity in accordance with a programme of phased implementation. The fifth function was to be treated as a distinct activity and organised within a separate organisational entity. Finally, the Secretary-General was given the discretion to deploy the sixth function identified by the Committee either to the clusters involving the first and second functions or that involving the third and fourth functions. The proposed clustering of functions was to be accompanied by a thorough rationalisation and streamlining of the organisational units concerned. However, perhaps the most controversial issue which arose in dealing with the question of secretariat support services was the proposal for the appointment of a Director General for Development and International Economic Cooperation. Following extensive debate in the Committee, during which a number of opposing views were expressed, it was proposed that the Assembly should invite the Secretary-General to appoint a high-level official to assist him in providing effective leadership and coordination in the implementation of activities in the economic and social fields. However, the level at which the official was to be appointed, his exact title and the question whether his appointment should be subject to confirmation by the General Assembly or left to the discretion of the Secretary-General could not be resolved by the Committee. Consequently, these issues were referred to the General Assembly itself for resolution. Although the report of the Ad Hoc Committee was accepted without a vote, a number of delegations made statements, either individually or on behalf of groups of countries, which sought to place particular interpretations on certain phrases appearing in the text or to provide general explanations of their understanding of the broad issues involved in the restructuring exercise. These qualifications notwithstanding, the report of the Ad Hoc Committee was endorsed by the General Assembly at its Thirty-Second Session in Resolution 32/197 to which the conclusions and recommendations of the Committee were annexed. In terms of the unresolved issues referred to it by the Committee, the Assembly decided to invite the Secretary-General to appoint, in full consultation with member-states, a Director General for Development and International Economic Cooperation at a high level commensurate with the functions to be carried out by him in assisting the Secretary-General to provide effective leadership to the various components of the UN system in the field of development and international economic cooperation and to ensure coordinated and effective management within the system. The insistence by the developing countries on confirmation of the appointment by the General Assembly was dropped on the understanding that the Secretary-General would appoint the Director General31 at an appropriately high level.

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The Assembly also reaffirmed its commitment to continue the process of restructuring of the UN system to which the results of the work of the Ad Hoc Committee were seen as an initial contribution. The Secretary-General and the organisations of the UN system were requested to implement the recommendations addressed to them and to report to the General Assembly at its Thirty-Third Session. The exercise in restructuring reflected in the work of the Committee represented a very important initiative within the UN system. It was the first time since the establishment of the system that such a comprehensive attempt had been made at a political level to review the economic and social sectors of the system which had evolved over the years into a complex structure and whose reform was made more urgent by the many resolutions adopted by the General Assembly since its Sixth Special Session proclaiming the need for a new international economic order. The inherent complexity of the task of dealing with such a structure provided both a challenge and a problem. It was evident that, during the course of this exercise, the developing countries sought to ensure a greater democratisation of a structure that was initially fashioned without their participation since the majority of these countries were still not independent at the time of its formation. In seeking to achieve this objective, they sought to reaffirm the overriding competence of the General Assembly which they had used effectively, since the Sixth Special Session, precisely because of its democratic character, as an important forum for advancing their demands for a just and equitable international economic system. They also sought to reaffirm the importance of UNCTAD as a forum for negotiations on trade and related issues because of the traditionally Third World orientation of the organisation. In an effort to extend and further strengthen the competence of the Assembly in the economic sphere, they pushed for the appointment of a Director General for Development and International Economic Cooperation to serve as a link between the Assembly and the UN system as a whole, in order to ensure that the resolutions of the Assembly were translated into concrete programmes of action on a system-wide basis. The developed countries, on the other hand, were reluctant to concede these demands. Instead, they sought to deny the competence of the Assembly as a legitimate negotiating forum on international economic and social issues and to limit its jurisdiction to the UN organisation itself, as distinct from the specialised agencies and other similar bodies. They also insisted on the recommendatory, rather than binding, nature of its decisions. In contrast, they sought to reinforce the role of the more limited and exclusive ECOSOC, while resisting attempts to expand its membership. Moreover, they saw the integration

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of the various development funds within the UN system as a means of ensuring greater control over such funds. Be that as it may, the Committee did succeed in initiating, at least at the formal level, a number of significant changes in the operation of the UN system. Moreover between the Thirty-Third and Thirty-Seventh Sessions, it inspired a system of continuous annual review by the General Assembly, of the process of restructuring in terms of such varied issues as the role and functions of the Director General for Development and International Economic Cooperation and the relationship of his office to other entities of the United Nations Secretariat as well as the UN agencies; the regrouping and reorganisation of the agenda items considered by the Second Committee; the further rationalisation of the work of the Administrative Committee on Coordination; the appointment of Resident Coordinators for operational activities of the United Nations system; the designation of regional commissions as executing agencies and the further decentralisation of functions to them for appropriate research and analytical activities as well as technical cooperation. For example, during the Thirty-Third Session,32 the Assembly welcomed the Secretary-General’s decision to designate the Director General for Development and International Economic Cooperation to chair, in his absence, meetings of the ACC as well as subject-oriented sessions devoted to general development issues. It also affirmed that the Director General, acting under the authority of the Secretary-General, should exercise effective leadership over those elements of the UN Secretariat dealing with economic and social issues, including the provision of policy guidelines for the activities carried out by them. Furthermore, it requested the Secretary-General to proceed with the decentralisation of appropriate research, analysis and technical cooperation activities to the regional commissions and also to take steps to involve the executive secretaries of the commissions in the work of the ACC and other relevant bodies in order to enable them to carry out their coordinating functions at the regional level. Similarly, during the Thirty-Fourth Session, the Assembly adopted a number of resolutions33 on restructuring which, among other things, affirmed that the UNDP Resident Representatives should normally be designated as UN Resident Coordinators and accordingly requested the Secretary-General to proceed with the designation of such Coordinators. ECOSOC was also requested to formulate for consideration by the Assembly appropriate proposals for the establishment of a single intergovernmental body for UN operational activities which would replace the existing bodies. At its Thirty-Fifth Session, the Assembly, in Resolution 35/203, welcomed the consultative arrangements within the Secretariat envisaged by the

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Secretary-General on policy relating to planning, programming, budgeting and evaluation. It also decided to consider at its Thirty-Sixth Session, the issues involved in the effective exercise of the functions of the Director General for Development and International Economic Cooperation which, as may be suspected from the frequent references to the question, was a matter of continuing concern to the developing countries which were anxious to ensure that the Director General was given the necessary authority and also provided with adequate resources to enable him to exercise his functions effectively. As a follow-up to this latter decision, the Assembly decided at its Thirty-Sixth Session34 to refer to ECOSOC the question of the relationship between the Director General and various entities of the UN Secretariat, which had been the subject of a report of the Joint Inspection Unit (JIU). During the Thirty-Seventh Session,35 the Assembly requested its President, in cooperation with the President of ECOSOC, to carry out consultations regarding the organisation and rationalisation of the work of the intergovernmental bodies of the UN in the economic and social fields and to submit a report on the subject to the Thirty-Ninth Session. It also requested the Secretary-General to proceed with his proposals for implementing the recommendations of the Joint Inspection Unit on the relationship between the Director General for Development and International Economic Cooperation and entities of the UN Secretariat. Finally, it was agreed to review all aspects of Resolution 32/197 during its next review of the restructuring process which it decided would be undertaken at its ThirtyNinth Session and, thereafter, once every three years, without prejudice to any future decision of the Assembly regarding the periodicity of such consideration. In this connection, the Secretary-General was requested to submit appropriate recommendations to the Assembly regarding the implementation of the relevant provisions of the resolution. Despite the relatively comprehensive nature of the restructuring process some sceptics argued that the changes put into effect were not really fundamental. Evidently, while the restructuring that had been accomplished may have geared the UN system to be more responsive to the demands of the developing countries for the creation of a new international economic order, real change leading to the actual establishment of the new order could only be brought about by a fundamental restructuring of the distribution of power in the international economic system itself. The discussions which took place during UNCTAD IV, the Conference on International Economic Cooperation (CIEC) and the Ad Hoc Committee on Restructuring of the Economic and Social Sectors of the UN system, as well as the decisions taken on the basis of these discussions, completed the first phase of the negotiations between the developed and the developing countries on

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the implementation of the principles and programmes articulated in the resolutions on the New International Economic Order. These negotiations have been dealt with at length since in many respects they served to shape the nature of the subsequent negotiations which took place between the developed and the developing countries during the period 1978 to 1983, which is the subject of the next chapter.

NOTES 1. 2.

3. 4.

5.

6.

7. 8.

9. 10.

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Resolution 3517 (XXX) in General Assembly Official Records: Thirtieth Session, Supplement No. 34 (A/10034). For the purpose of UNCTAD, countries were allocated to a number of different groups. Group A comprised the African and Asian member states and Yugoslavia; Group B – Western Europe and other states (including the US and Japan); Group C – Latin America and Group D – Eastern Europe. Groups A and C, in effect, combined to function as the Group of 77. See Resolution 93 (IV) of the Conference. The products to be covered by the Programme were bananas, bauxite, cocoa, coffee, copper, cotton and cotton yarn, hard fibres and products, iron ore, jute and products, manganese, meat, phosphates, rubber, sugar, tea, tropical timber, tin and vegetable oils, including olive oil and oil seeds. Among the developing countries, the representative of Colombia, although joining in the consensus on the resolution, reiterated his position that the integrated programme should exclude commodities already covered by international agreements. He referred in particular to the International Coffee Agreement of 1962 in which Colombia, as a major coffee producer, had a special interest. He also expressed doubts about the suitability of the Common Fund for commodities characterised by structural over-production. See Resolution 96 (IV) entitled: ‘A Set of Interrelated and Mutually Supporting Measures for Expansion and Diversification of Exports of Manufactures and Semi-Manufactures of Developing Countries’ which was adopted without dissent, and Resolution 97 (IV) entitled ‘Transnational Corporations and Expansion of Trade in Manufactures and Semi-Manufactures’ which was adopted by 84 votes to none, with 16 abstentions. See Resolution 91 (IV) which was adopted without dissent. See Resolution 87 (IV) – Strengthening the Technological Capacity of the Developing Countries; 88 (IV) – Industrial Property; and 89 (IV) – International Code of Conduct on Transfer of Technology – all of which were adopted without dissent. See Resolution 89 (IV) – International Code of Conduct on the Transfer of Technology. It is estimated that aid flows from DAC countries as a percentage of GNP declined from 0.53 per cent in 1962 to 0.33 per cent in 1974.

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11. 12. 13. 14.

15. 16. 17. 18. 19. 20.

21.

22.

23. 24. 25. 26. 27. 28. 29.

30.

31. 32. 33. 34. 35.

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See Resolution 94 (IV) entitled Debt Problems of Developing Countries. See Resolution 98 (IV) which was adopted without dissent. The author had the privilege of chairing the Group. See TD/192: Economic Cooperation Among Developing Countries and TD/ 192/Suppl. 1: Elements of a Programme of Economic Cooperation Among Developing Countries. See Resolution 92 (IV). See Resolution 9 (IV). See document entitled ‘A New Structure for Global Economic Cooperation’. During the late 1970s, the General Assembly itself began to assert its role in the negotiations on economic issues. See Resolution 90 (IV). In the case of the developed countries, Australia, Canada, Spain, Sweden and Switzerland were added to the original participants at the preparatory meeting in October 1975, namely, the EEC, Japan and the USA, to make up their full complement of representation at the Conferences. No representatives from the Soviet bloc countries nor China participated. The two co-chairmen were Alan J. McEachen, Secretary of State for External Affairs of Canada, and Manuel Perez Guerrero, Minister of State for International Economic Affairs of Venezuela. The co-chairmen of the commissions were as follows: Energy – Saudi Arabia and USA; Raw Materials – Japan and Peru; Development – Algeria and the EEC; Finance – EEC and Iran. The commissions met February 11–20; March 17–27; April 21–28; and June 8– 15. During this period, the commissions met July 12–17; September13–20; October 20–27; and November16–23. See, for example, J. Amuzegar, ‘Requiem for the North-South Conference’, Foreign Affairs, Vol. LVI, 136–159. Resolution 3362 (S-VIII) of September 16, 1975. U.N. Publication Sales No. E75. II.A7. See resolution 32/197 and annex. It will be noticed that ECOSOC is referred to as the ‘central forum’ compared with the General Assembly which is designated as the ‘supreme organ’ and ‘principal forum’. As a result of this decision, the UNDP Resident Representative is normally designated by the Secretary-General as the UN Resident Coordinator at the country level. Ambassador Kenneth Dadzie of Ghana, who had served as Chairman of the Ad Hoc Committee, was subsequently appointed to the post. See Resolution 33/202. See Resolutions 34/211, 34/212, 34/213 and 34/215. See Resolution 36/187. See Resolution 37/442.

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-5Negotiations on the New International Economic Order (1978–1983): A Chequered Journey

T

he negotiations on the New International Economic Order involved an almost continuous process of exchange between the developed and the developing countries during the 1970s and early 1980s and were carried out in many different forums. They also involved both substantive and procedural issues. This chapter will highlight some of the main issues that were addressed during the second phase of the negotiations.

The Committee of the Whole In light of the inconclusive results of the Paris Conference, the Assembly decided at its Thirty-Second Session, which was convened immediately following the closure of the resumed Thirty-First Session, that, in future, negotiations on the establishment of the New International Economic Order should take place within the framework of the United Nations system rather than in more limited forums outside the system. In keeping with this position, the Assembly established a Committee of the Whole to monitor the implementation of decisions arrived at during the negotiations in order to provide impetus to the negotiations and to serve as a forum for facilitating agreement on outstanding issues.1 The Committee was to meet intersessionally until the special session of the Assembly which was scheduled to be held in 1980, and was requested to report on its work to the Thirty-Third and Thirty-Fourth Regular Sessions as well as to the special session itself. The establishment of the Committee of the Whole during the Thirty-Second Session was a subject of considerable controversy. It was motivated by a feeling on the part of the developing countries that it was necessary not only to affirm the principle that discussions on international economic issues should take

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place in future within the UN system but that it was also important to establish a mechanism within the system that could have a broad overview of the negotiations within the various UN organs and also provide the necessary political stimulus to ensure that the discussions achieve their objectives. In this way, it would also serve to reaffirm the overriding jurisdiction of the UN General Assembly in the discussions and thus reinforce the role the Assembly had sought to perform during the Sixth and Seventh Special Sessions in laying down the broad parameters that should guide the negotiations on change in the international economic system. The developed countries, on the other hand, felt that it was unnecessary to create a separate committee to perform this function and that the negotiations on the various issues relevant to the promotion of international economic cooperation should be left to the existing forums of the United Nations system. Moreover, they argued that, under the Charter, ECOSOC was already assigned the role of coordinating the work of the various organisations of the UN system. There were, therefore, strong pressures from the developed countries to strengthen the role of ECOSOC as the mechanism for overseeing the negotiations between the developed and the developing countries. The developing countries felt, however, that because of its limited membership, ECOSOC could not serve as the primary forum for this purpose. Instead, it was felt that a Committee of the Whole of the General Assembly, by virtue of the fact that it would be open to all member states, would be a more appropriate forum. Moreover, the establishment of a special committee would not only provide the necessary flexibility for meeting on a fairly continuous basis without having to summon a special session of the General Assembly but it could also be vested with a specific and more sharply focused mandate, namely, to provide the necessary political impetus for expediting decisions on the more difficult issues involved in the negotiations. As can be seen, the debate closely paralleled the discussions that had taken place on these issues in the Committee on Restructuring of the Economic and Social Sectors of the UN System which were dealt with in the previous chapter. Given the fact that the developed countries were bent on limiting the role of the General Assembly, the establishment of the Committee of the Whole represented a significant diplomatic victory for the Group of 77. In terms of its actual operation, the Committee held two organisational meetings in February 1978 during which it elected its officers2 and adopted the provisional agenda for the first and second substantive sessions which were scheduled to be held later in the year. Within this framework, the Group of 77, the EEC and the USA proposed a number of specific issues for consideration by the Committee.

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During its first substantive session which was held from May 4 to 13, the Committee considered the agenda items dealing with the principal factors affecting the world economy, the transfer of resources in real terms to the developing countries, the monitoring of the implementation of decisions and agreements reached in the negotiations on the New International Economic Order in the appropriate bodies of the UN system, and the contribution of the Committee to the resolution of the difficulties in the negotiations and in expediting agreement on outstanding issues – all of which, in fact, exemplified the purpose and function of the Committee. In discussing these agenda items, the developed countries were reluctant to go beyond positions already articulated by them in other forums. This was particularly true in the case of the agenda item dealing with the transfer of resources on which the developed countries maintained that they had no mandate to endorse decisions different from those adopted by their ministers of finance at the IMF meeting held in Mexico just prior to the meeting of the Committee. The Group of 77, on the other hand, sought to discuss such critical issues as the level of ODA flows, particularly the need for developed countries to achieve the ODA target of 0.7 per cent of GNP; the question of ‘conditionality’ of IMF drawings; and the restructuring of the international monetary and financial system to make it more responsive to the needs of developing countries. The developing countries felt that the Committee would achieve an important breakthrough if it could extract a commitment from all developed countries to reach the ODA target of 0.7 per cent of GNP by 1980, but a number of developed countries continued to express their inability to make such a commitment.3 Moreover, on the question of the democratisation of the IMF to make it more responsive to the needs of developing countries, the majority of developed countries showed little disposition to go beyond the quota revisions already adopted by the Fund to accommodate certain OPEC countries. However, it was the question of the ‘conditionality’ of the IMF drawings that provoked the greatest controversy. The developing countries took the position that the Committee should recommend to the Fund an urgent reexamination of the conditions imposed upon developing countries seeking to deal with their balance of payments problem, since the conditions imposed in such cases often ran counter to the development needs of these countries. In fact, some developing countries felt that it was in this area that the ‘ideological’ bias of the institution was most visible. After lengthy negotiating sessions on these issues, it became clear that there was little prospect of a consensus developing on certain parts of the text that had been submitted by the Chairman of the Committee as the basis for a compromise agreement between the developed and developing countries.

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Of even greater importance, was the disagreement between the developed and the developing countries on the interpretation of the mandate of the Committee and its decision-making competence, which came to a head towards the end of the session. Regarding the specific role and functions of the Committee, some developed countries insisted from the very beginning that the Committee should confine itself to an exchange of views on the various agenda items rather than engage in substantive negotiations on the issues. While the Group of 77 agreed that the Committee should not encroach on the functions of other bodies within the UN system charged with the responsibility for the negotiation of specific issues, the Group, nevertheless took the position that the Committee had an important responsibility to provide the overall political direction to guide the detailed negotiations taking place in other UN forums. The failure on the part of some developed countries to appreciate the critical distinction between the negotiation of broad political parameters to guide discussions in other forums and the detailed discussions themselves created a number of procedural difficulties for the Committee. In light of these differences, the Committee decided to suspend its first session and to reconvene in September. It also decided to postpone its second session which was scheduled to take place in June 1978 and to convene it immediately following the resumed first session. However, before its suspension, the Committee was able to agree on the agenda for its second session. Despite the disappointment over the inconclusive nature of the May session of the Committee, there was general agreement both on the part of the developed countries and the Group of 77 that the session had served to clarify the positions of the two sides on the agenda items discussed. Some developed countries attributed the lack of significant results at the session to the absence of a sufficiently high level of representation from the developing countries since many developed countries were represented on the Committee by ministers and other high officials from their capitals. In reality, however, it was the general reluctance of the developed countries to engage in substantive negotiations on the issues that presented the greatest difficulty for the Committee. In view of the inconclusive outcome of the May session, the Chairman of the Committee took the initiative to carry out consultations among delegations during the summer sessions of ECOSOC in Geneva in June 1978, in an effort to resolve the difficulties relating to the mandate of the Committee. These consultations were continued during early September 1978, just prior to the reconvened first session of the Committee which actually began on 8 September. On the basis of these consultations, the Chairman was requested to submit to the reconvened session a formulation which might serve as a basis for

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agreement regarding the functions of the Committee. The formulation submitted by the chairman proposed that the Committee should negotiate with a view to arriving at agreed conclusions which would be addressed to member states and relevant international organisations through the General Assembly. Despite the wide measure of support for this formulation, the Committee was unable to reach agreement because of the unwillingness of the United States to join in the consensus and its insistence that the Committee should confine itself to a ‘high-level concept-oriented dialogue by senior policy officials’.4 In view of the resulting stalemate, the Committee decided to suspend the reconvened first session and to submit an interim report to the General Assembly at its Thirty-Third Session. During 1979, the Committee was able to overcome its procedural difficulties and to hold three sessions5 which produced much more positive results on a number of substantive issues. During the January session, the Committee adopted agreed conclusions on several aspects of the problem of the transfer of resources to the developing countries. The Committee called for an increase in the flow of bilateral and multilateral development resources to developing countries and identified a number of specific measures to achieve this objective. For example, the developed countries were requested to make, every effort to achieve the ODA target of 0.7 per cent of GNP. To this end, they were urged to increase their aid budgets by an appropriate percentage each year and to reduce the time lag between commitments and disbursements. In terms of the quality of resource flows, the developed countries were requested to provide ODA to least developed countries in the form of grants and also to seek to untie such assistance to the maximum extent possible. With regard to the traditional definition of ODA, the developed countries were also requested to modify the concept by, among other things, calculating ODA as net of the amortization of interest payments and to include in this category only those loans with a minimum grant element of 50 per cent. In terms of multilateral flows, the Committee agreed that multilateral development institutions should increase their assistance to the developing countries in real terms and should also effect improvements in their lending policies, including the reactivation of the ‘third window’ of the World Bank. Similarly, the governing bodies of UN development organisations were urged to consider ways and means of achieving long-term financing of their programmes, including the introduction of multi-year pledges. The Committee also agreed that the proposal for the establishment of a long-term facility in the World Bank to finance the purchase of capital goods by the developing countries should be considered as early as possible.

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In the consideration of international monetary issues, the Committee placed special emphasis on the conditionality of IMF drawings which had been a major subject of discussion at its first substantive session in May 1978. In this connection, it called upon the Fund to complete at an early date the review of guidelines relating to the conditionality of its drawings. The Committee felt that in carrying out the review, the Fund should pay particular attention to social and economic needs and objectives, including the specific needs of developing countries and the role of internal and external factors in their balance of payments problems. In addition to the decisions on the transfer of resources, the Committee decided to examine at its March session specific issues, such as world food production and agricultural development, the strengthening of the industrial capacity of the developing countries, the implementation of decisions and agreements reached within the UN system in the negotiations on the New International Economic Order, and its own role in providing impetus to the negotiations and in facilitating agreement on outstanding issues. It also agreed that the session to be held in September would review the principal factors affecting the world economy, the results of UNCTAD V (which was due to be held in May/June 1979), the problems of the least developed countries, landlocked and island developing countries and the most seriously affected countries (MSAs). The March meeting of the Committee endorsed a comprehensive range of recommendations on world food problems and agricultural development. The Committee agreed that urgent action should be taken to increase agricultural production in developing countries as an essential element in their overall development. The developed countries and international organisations were, therefore, urged to increase their assistance to the developing countries with special reference to food deficit countries. It was proposed that the resources of the International Fund for Agricultural Development (IFAD) should be replenished on a continuous basis and that donors should provide the necessary financial and technical assistance to improve the facilities for fertiliser and pesticide production in the developing countries. In addition, donor countries were requested to provide the necessary financial support to enable the Food and Agriculture Organisation (FAO) Action Programme for the Prevention of Food Losses to reach the agreed funding level of US$20 million. In terms of food security, the Committee urged all countries to establish adequate levels of food reserves. Donor countries were requested to ensure the attainment by 1979 of the agreed target of 500,000 tons of cereals of the International Emergency Food Reserve. Moreover, the Committee urged both developed countries and international organisations to increase substantially

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their support for food security schemes in the developing countries. It also emphasised the critical need for food aid to be enlarged and made more flexible. In this respect, it was agreed that food aid should be provided essentially on a grant basis, particularly in the case of the least developed countries, and that traditional donors and other countries in a position to do so should ensure the provision of at least ten million tons of cereals as food aid a year. Expressing its concern regarding the instability of the prices of agricultural products exported by the developing countries, the Committee urged developed countries to make the necessary adjustments in those sectors of their economies which required protection against agricultural exports from developing countries. It also recommended an expansion of the Generalised System of Preferences (GSP) to include agricultural commodities. In an effort to increase agricultural production in the developing countries and to ensure adequate levels of nutrition for the populations of these countries, the Committee emphasised the importance of undertaking appropriate investment in land improvement schemes and the promotion of rural development programmes. Therefore it requested the UN system to improve its capacity to assist the developing countries in establishing appropriate food and nutrition strategies. An examination of these measures would reveal that they closely paralleled the decision on food and agriculture adopted during the Seventh Special Session, and that they, in fact, represented an attempt to update and expand, those decisions. Nevertheless, the fact that the Committee was forced to reiterate some of the exhortations made at the Special Session was, to some extent, an indication of the slow pace of implementation of previous agreements. In considering the agenda item dealing with the implementation of decisions and agreements reached in the negotiations on the New International Economic Order in the appropriate bodies of the United Nations system, the Committee reaffirmed the urgent need to convert UNIDO into a specialised agency in order to enable it to play a central coordinating role in the field of industrial development and cooperation. All countries were, therefore, urged to cooperate in the achievement of this objective. At its third session held in September 1979, the Committee engaged in an extensive debate on the substantive agenda items before it, focusing mainly on the factors affecting the world economy. It was evident during the debate that the developed countries preferred to concentrate on the requirements of international economic management in order to safeguard their economic prosperity which they felt was a necessary precondition for addressing the development needs of the developing countries. This emphasis was consistent with the traditional position of the developed countries in the negotiations on change in the international economic system, although the arguments tended

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to be made much more explicitly during the debate in the Committee. Needless to say, the developing countries disagreed with this approach and argued instead that the problem of underdevelopment, which was manifested in poverty and disease, was qualitatively different from the problem of international economic management, and therefore, should be addressed as a priority in its own right. This fundamental conceptual difference between the approaches of the developed and the developing countries emerged as the most conspicuous features of the general debate. Based on the substantive discussions which followed the general debate, the Committee recommended that the Thirty-Fourth Session of the UN General Assembly should consider as a priority item the proposal introduced by the Group of 77 for the initiation of global negotiations on international economic cooperation.6 In addition, the Committee adopted a text on measures relevant to the needs of the island developing countries but could not agree on other proposals submitted in respect of the least developed countries, the land-locked developing countries and the most seriously affected countries. Similarly, in view of the limited time available for negotiations, it was not possible to arrive at an overall consensus on the text on industrial development submitted by the Group of 77. In keeping with the recommendation of the Committee, the UN General Assembly at its thirty-fourth session decided7 to launch at its Eleventh Special Session (which was scheduled to be held in 1980) a round of global negotiations on international economic cooperation for development. Moreover, it was decided that the Committee of the Whole should serve as the Preparatory Committee for the negotiations and make the necessary arrangements to enable the Assembly to launch the negotiations at the special session. In other words, the Committee of the Whole was transformed into a preparatory committee for the proposed global negotiations. However, as will be seen later, despite extensive consultations between the developed and the developing countries following the Thirty-Fourth Session, it was not possible to secure agreement on the terms and conditions for launching the negotiations. The Committee of the Whole represented a bold and innovative experiment aimed at strengthening the role of the UN General Assembly, acting through a flexible mechanism, in speeding up the negotiations on the New International Economic Order. However, its operation was vitiated by the determined attempt of the developed countries to limit its functions so as to render it incapable of making any real contribution to the solution of a number of thorny problems addressed by the Committee. Consequently, although the Committee was able to reach broad agreement on some important aspects of the transfer of resources to the developing countries, as well as food and

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agriculture, it proved incapable of bridging some of the fundamental differences between the developed and the developing countries that had proved to be major stumbling blocks in achieving the objectives of the proposed new order. In addition to the efforts of the Committee of the Whole, the negotiations on issues relevant to the New International Economic Order continued in other forums such as UNCTAD and its various bodies and during the annual sessions of the UN General Assembly itself. The following sections of this chapter highlight the major issues dealt with in these negotiations and also assess the outcome of the discussions between the developed and the developing countries on specific issues, such as commodities and debt, which were the subject of separate negotiations.

The Common Fund and the Integrated Programme on Commodities In keeping with the decision adopted at UNCTAD IV, the Negotiating Conference on the Common Fund held two substantive sessions in March and November 1977, as well as a number of preparatory meetings to consider, among other things, the objectives of the Fund, its financing needs, mode of operation, voting structure and management. But despite lengthy discussions, they failed to reach agreement in view of a number of basic differences between the developed and the developing countries on these issues. The central difficulty related to the fact that the developing countries saw the Common Fund, which was the key element of the Integrated Programme on Commodities, as a mechanism for the effective management of international commodity trade and a framework which would enable them to exercise a significant, if not preponderant, influence in this field. On the other hand, many developed countries were reluctant to accept this conception of the Common Fund since they felt that it would involve an unwarranted intervention in international commodity markets, contrary to the principles of international free trade which they advocated. Given their way, many developed countries would have preferred compensatory financing arrangements, such as those provided through the IMF or under the Stabex Scheme embodied in the EEC/ACP Lomé Convention, to make up for shortfalls in export earnings of the developing countries. It was clear, however, that this approach did not envisage any fundamental alteration in the existing structure of international trade in primary commodities which had traditionally operated to the disadvantage of the developing countries. Consequently, despite the expressed commitment of the developed marketeconomy countries to the Common Fund, declared at both the G7 Summit

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Downing Street, London in May and the concluding session of the Paris Conference (CIEC) in June 1977, the efforts of these countries were directed at making the Fund compatible with more traditional approaches to the commodity problem. It should be mentioned that, in April 1978 in an effort to advance agreement on the subject, the Commonwealth Secretary-General convened a ministerial meeting of Commonwealth countries in London to consider the report of the Commonwealth Technical Group on the Common Fund which had been appointed by the Secretary-General in keeping with a decision taken at the Commonwealth Heads of Government Conference in London in June 1977. The meeting did provide an opportunity for a useful exchange of views between the developed and the developing countries of the Commonwealth and did succeed, to some extent, in influencing the policy of some developed Commonwealth countries on the issue. Following consultations carried out by the Secretary-General of UNCTAD with the developed and the developing countries, the Negotiating Conference on the Common Fund was convened during 1978. After further negotiations, the Conference adopted in June 1980 the agreement establishing the Fund, which was expected to serve as the main instrument for promoting greater price stability in the international trade in commodities of export interest to the developing countries. Following this event, efforts focused on ensuring the early entry into force of the agreement and the completion of the necessary preparatory work required to make the Fund operational. The agreement establishing the Fund was opened for signature on October 1, 1980. By the end of July 1981, the agreement had been signed by 43 countries but ratified by only eight. In addition, pledges of voluntary contributions to the Second Account of the Fund, which was designed to finance measures other than stocking, amounted to $225 million compared with the target of $280 million. In terms of the actual elaboration of the elements of the Fund, after some initial delay, the Preparatory Commission established by the UN Negotiating Conference on the Fund, met initially in November 1980, and again in February 1981. At the February 1981 session, the Commission adopted its work programme and decided to establish two Working Parties to carry out its work. Working Party I dealt with administrative, legal and procedural matters, while Working Party II dealt with the operational and financial matters relating to the Fund. Working Party I, which held its first session in May 1981, prepared drafts on the rules of procedure of the Governing Council and of the Executive Board, as well as the rules and regulations for the conduct of the business of the

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Fund which were finalised by the Commission at its third session in September 1981. The Working Party was also able to carry out preliminary discussions on the issue of the delegation of powers to the Executive Board. Similarly, at its first session in July 1981 Working Party II was also able to arrive at a wide measure of agreement on the rules and regulations governing the operations of the First Account dealing with the financing of buffer stocks. The adoption of the agreement on the Common Fund marked an important step in the efforts to secure the establishment of the Integrated Programme on Commodities. However, the success of the Programme was dependent on the conclusion of agreements in respect of the individual commodities covered by the Programme. By the end of 1981, only two international commodity agreements (ICA), embodying provisions for dealing with price fluctuations (which was one of the major objectives of the IPC) had been negotiated, namely, natural rubber and jute and jute products. In addition, three existing ICAs, namely, those on cocoa, coffee and tin, had been renegotiated. In the case of other ‘core commodities’ not covered by ICAs, the majority of which were subject to price fluctuations, it had not been possible to bring about the negotiations necessary for the conclusion of agreements containing economic clauses, although there was agreement in principle to establish an ICA with such provisions for tea. The other commodities for which it had not been possible to conclude comprehensive agreements were cotton and hard fibres, tropical timber, bananas, meat, vegetable oils and oil-seeds. Despite the considerable efforts that had been made, obstacles to the operationalisation of the Common Fund as the central element of the Integrated Programme on Commodities still had to be overcome. Article 57 of the agreement establishing the Common Fund provided for its entry into force upon the receipt of instruments of ratification, acceptance or approval from at least 90 states whose total capital subscriptions comprised not less than two-thirds of the directly contributed capital of the Fund, provided that not less than 50 per cent of the target for pledges of voluntary contributions to the Second Account had been met and that the foregoing requirements had been fulfilled by March 31, 1982 or by such later date as states that had deposited such instruments by the end of that period might decide by a two-thirds majority vote of those states. Since the conditions for bringing the agreement into force had not been met by the date stipulated, the 21 states that had ratified the agreement decided in Geneva on June 3, 1982 to extend the period for the fulfilment of the requirements for the entry of the agreement into force until 30 September 1983. By May 4, 1983, although 92 states had signed the agreement, only 49 states, accounting for 34.25 per cent of the directly contributed capital of the

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Fund, had ratified it. Moreover, pledges of voluntary contributions to the Second Account amounted to $225 million compared with the stipulated target of $280 million. In view of this situation, special provision was made during UNCTAD VI in Belgrade in June 1983 to enable states wishing to ratify the agreement to do so. In dealing with the Common Fund and the overall Integrated Programme, UNCTAD VI invited those countries which had not yet made pledges to the Second Account to do so at an early date with a view to meeting the target for voluntary contributions. Moreover, the Conference urged the expeditious conclusion of the necessary preparatory work in order to enable the establishment of suitable agreements in the case of the core commodities covered by the Integrated Programme. A major stumbling block in bringing the Common Fund into force was the delay in the ratification of the agreement by a number of least developed countries because of their inability to pay the required capital subscriptions to the Fund. However, the offer by the OPEC countries, Norway and the EEC to pay the full capital subscriptions of these countries was intended to facilitate the early entry into force of the Common Fund.8

The Ministerial Meeting of the Trade and Development Board on Debt (March 1978) By the mid-1970s, the increasing debt problem of the developing countries had begun to attract the attention of the international community in view of the heavy economic burden it imposed on many developing countries. As pointed out previously, the total debt owed by the developing countries at the end of 1976 amounted to $180 billion, while debt service payments used up a significant proportion of new aid to the developing countries. In the Manila Declaration and Programme of Action adopted at the Third Ministerial Meeting of the Group of 77 in January/February 1976, the developing countries had proposed, among other things, a programme of debt relief for the developing countries in the form of waivers or postponement of interest payments and/or amortisation, the cancellation of principal, and the consolidation of the commercial debts of interested debtor countries under the auspices of UNCTAD. The problem was subsequently discussed at UNCTAD IV under the agenda item dealing with money and finance and the transfer of real resources to the developing countries, but the Conference failed to agree on common solutions. Consequently, it was decided to refer the matter to the Trade and Development Board for consideration at a special ministerial session.

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In their approach to the problem, the developing countries insisted that the debt issue had assumed such importance that it should be dealt with in a multilateral framework rather than on a purely bilateral basis between individual creditor and debtor countries. Moreover, the developing countries, by and large, argued in favour of a generalised approach to the question of debt relief. The developed countries, on the other hand, advocated a ‘case by case’ approach on the ground that the debt problem varied from country to country. The ministerial meeting of the Trade and Development Board held in March 1978, in pursuance of resolution 94 (IV) of UNCTAD IV, achieved some limited success in dealing with the issue.9 Among other things, the developed donor countries undertook to adopt measures for the adjustment of the terms of past bilateral official development assistance (ODA) to bring them in line with the prevailing softer terms of such assistance or other equivalent measures as a means of improving net ODA flows in order to contribute to the development of the developing countries. In addition, the meeting agreed that international consideration of the debt problem of a developing country would be initiated only at the specific request of the debtor country concerned. It was further agreed that such consideration would take place in an appropriate multilateral framework consisting of the interested parties and with the help of appropriate or relevant international institutions to ensure timely action – taking into account the nature of the problem which might vary from acute balance of payments difficulties requiring immediate action to longer-term situations relating to structural problems requiring longer term measures. It was also agreed that debt reorganisation should protect the interest of both debtor and creditor countries equitably in the context of the promotion of international economic cooperation. Finally, the Board requested the SecretaryGeneral of UNCTAD to convene an intergovernmental group of experts to recommend to its tenth special session (June 1979) detailed features for further operations relating to the debt problems of interested developing countries and recommended that UNCTAD V should review measures taken by the developed countries to provide debt relief to the developing countries.10 It is clear that the meeting made an important concession to the demand of the developing countries for the debt problem to be considered in a multilateral context, but on the substantive issue of debt relief, the actual impact of the action taken in pursuance of the relevant aspects of the resolution adopted at the meeting was limited and somewhat uneven. It was estimated, for example, that by July 1981 some 45 developing countries had benefited from action taken by the DAC creditor countries, by way of write-off, readjustment of the terms of past ODA debts or other equivalent measures, amounting to approximately $5.7 billion.11 However, although a small number of least

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developed countries were expected to benefit in terms of the write-off of over 50 per cent of their total debt, the bulk of the debt of the other developing countries was not significantly affected. Reference is made to the special meeting of the Trade and Development Board in March 1978, since it represented an attempt to convene a special ministerial session of a UN body to deal with a specific issue in the ongoing discussions on the problems of the developing countries – in this case, the debt problem. In fact, this effort was consistent with the provisions of the resolution adopted at UNCTAD IV which called for more frequent ministerial meetings of the Trade and Development Board in an effort to resolve specific issues falling within its purview. Even more important, however, was the fact that special attention was given to the debt problem, which, as will be seen later, came to represent one of the major challenges facing the international community during the 1980s. The negotiations on the Common Fund and the special ministerial session of the Trade and Development Board on the debt problem were specific, albeit important, episodes in the ongoing discussion of issues relevant to the development needs of the developing countries. However, the next opportunity for comprehensive negotiations on the entire range of issues involved in the New International Economic Order was provided by UNCTAD V, to which we now turn our attention.

UNCTAD V Unlike the fourth session held in Nairobi three years earlier, which had generated some expectation of agreement between the developed and the developing countries on a number of issues, including the Integrated Programme on Commodities, UNCTAD V, which was held in Manila from May 7 to June 3 1979, met in an atmosphere of increasing pessimism regarding the prospect of achieving any significant breakthrough in the ongoing negotiations between the two sides on issues relevant to the achievement of the objectives of the New International Economic Order. In preparation for the Conference, the Group of 77 met in Arusha, Tanzania, from February 5–16, 1979 and adopted the so-called Arusha Programme of Collective Self-Reliance and Framework for Negotiations which, in effect, represented the negotiating platform of the developing countries on the issues before the Conference. Despite the overall commitment to unity and solidarity on the part of the developing countries, the Arusha meeting did not escape controversy among the regional groups on the agenda items dealing with international trade with

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special reference to the Generalised System of Preference and manufactures and semi-manufactures; the Integrated Programme on Commodities; the code of conduct on the transfer of technology and the problems of the least developed countries. The discussions on the terms of the extension of the Generalised System of Preferences (GSP) which took place in Arusha in the context of the consideration of the trade in manufactures and semi-manufactures once again proved contentious. Disagreement centred largely on the question of the preservation of the special preferences enjoyed by some developing countries. On the one hand, the ACP countries defended their right to special preferential arrangements under the Lomé Convention and insisted on compensation in the event of the loss of such preferences. On the other hand, the Latin American Group led by Brazil took the position that the GSP should be extended not only in terms of its product coverage but also to embrace all developing countries. The decision finally adopted at the meeting recognised the need for the countries enjoying special preferential treatment to be compensated for the loss of such preferences as a result of the expansion of the GSP. Regarding the Integrated Programme on Commodities, controversy centred on the specification of the minimum contribution to be made by governments to the Common Fund. Many Latin American countries, most notably Brazil, felt that the meeting should not identify a specific sum, while others including the African countries, argued that it was desirable to specify a meaningful minimum contribution in order to indicate the seriousness of the commitment of the developing countries to the establishment of the Fund as a key element of the Integrated Programme on Commodities. It was finally agreed that the main source of capital for the Fund should be mandatory direct government contributions (cash and on call) with a meaningful minimum equal amount of US$1 million to be paid by each country and an assessed additional contribution based on an appropriately modified UN formula. In the discussions on technology, the debate turned on the character of the proposed code of conduct for the transfer of technology. A number of delegations insisted that the Group of 77 should demand the adoption of a legally binding code. Other delegations felt, however, that this was an impractical proposal in view of the well-known opposition of the developed countries to such an approach. A compromise formula was finally adopted in which the Group of 77 reaffirmed the need for a legally binding code but merely urged the resumed session of the UN Conference on the subject to seek to achieve this objective in the shortest possible time. Finally, the question of the treatment of the least developed countries provoked heated debate since the least developed countries sought to ensure the adoption of adequate measures to deal with their special needs. However,

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other developing countries sought to ensure that such measures would not be adopted to their detriment. In the end, the interests of the least developed countries prevailed and the meeting recommended the adoption by UNCTAD V of a number of short-term as well as longer-term measures in favour of these countries which were designed to transform their economies and promote a self–sustained pattern of development. It is worth noting that the controversy between the two groups of developing countries was provoked by the efforts of the developed countries to channel international development assistance increasingly in the direction of the least developed countries which, in turn, generated fears on the part of the ‘more developed’ developing countries that their needs would be neglected. It is significant, nevertheless, that despite the heated debates which took place on these various issues, the meeting adopted a consensus report, thus indicating the willingness of the regional groups to reconcile their differences in the interest of the overall unity of the Group of 77. As a result, the developing countries were able to proceed to Manila with a united front. As far as UNCTAD V itself is concerned, apart from the plenary sessions in which the general debate took place, the substantive work of the Conference was carried out in the eight Negotiating Groups which dealt with the evaluation of the world trade and economic situation and a consideration of issues, policies and appropriate measures to facilitate structural changes in the international economy; institutional issues; developments in international trade and manufactures and semi-manufactures; commodities; monetary and financial issues; technology; shipping; least developed among the developing countries; land-locked and island-developing countries; trade relations among countries having different economic and social systems and trade flows resulting therefrom; and economic cooperation among developing countries. A number of these items were grouped together to form the work programme of the individual negotiating groups. As many as four, sometimes even five, of these Groups met simultaneously when the plenary was not in session. The debate in the plenary gave early warning of the differences separating the developed and the developing countries on the issues before the Conference. While the statements of the developing countries emphasised the need for fundamental structural change in the international economic system, and a stemming of the tide of protectionism, the developed countries advocated common action on the part of the international community to stimulate economic growth and refuted the charge of protectionism levelled at them by the developing countries. Despite lengthy discussions in the several Negotiating Groups, the Conference produced rather limited results. Only a few resolutions of any real

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substance were adopted, while others were referred to the permanent machinery of UNCTAD for further consideration. In at least one case, the Group of 77 resorted to the device of issuing a unilateral statement in the absence of agreement on the issue. The discussion in Negotiating Group I on the world trade and economic situation, which was perhaps the major issue before the Conference as far as the debate on the New International Economic Order was concerned, illustrated the almost irreconcilable differences with which the Conference sought to deal. On the one hand, the developing countries saw the prevailing malaise in the world economy not as a mere cyclical phenomenon but as a symptom of underlying structural maladjustment. They, therefore, advocated a policy of fundamental structural change as a solution to the problem. The developed countries, on the other hand, stressed the theme of interdependence and the interrelationship between the various economic problems which they felt required cooperation on the part of all countries. They also advanced the novel, if dubious, thesis that structural change should be the product of the operation of natural market forces. Moreover, they disputed the notion of the deteriorating terms of trade between the developed and the developing countries which had at least been conceded in previous negotiations. In addition, although they were receptive to the continuation of negotiations on specific issues, they were reluctant to link the search for specific solutions to any effort to establish a new international economic order. In the face of this divergence of views, the Group was unable to arrive at any agreement on the agenda item. The question of protectionism which was discussed in Negotiating Group II under the broad heading of international trade also provoked some controversy. The developed countries disagreed with the claim of the developing countries that the former had actually adopted protectionist measures which had adversely affected the trade of the latter. Consequently, the resolution on the subject, which was adopted by consensus, merely called for continued resistance to protectionist ‘pressures’ and urged the developed countries to observe the standstill provisions which they had previously accepted. Substantive agreement on the issue, to which the developing countries had attached considerable importance, was largely deferred by requesting the Trade and Development Board to continue to study the problems of protectionism with a view to formulating appropriate recommendations on the subject. Agreement on the other item dealt with by Negotiating Group II, namely, the Multilateral Trade Negotiations (MTNs), proved equally elusive. Prior to the convening of UNCTAD V, the MTNs had been virtually concluded and

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final texts and agreements issued in respect of several aspects of the negotiations with the exception of those relating to tariffs and safeguards. However, many developing countries were unhappy with the outcome of the negotiations on the ground that their interests were not sufficiently taken into account. They also complained about the lack of transparency in the negotiations and the limited scope for their participation, which they felt compromised the multilateral character of the negotiations. The developed countries, while conceding that the results had fallen short of the expectations of some countries, felt that the agreements reached during the negotiations would strengthen the framework for the conduct of international trade. In view of the persistence of this difference in perception between the developed and developing countries, the Conference decided to adopt a largely procedural resolution which requested the Trade and Development Board to carry out an evaluation of the MTNs. In the absence of agreement on the substantive issues, the Group of 77 unilaterally adopted a separate declaration on the subject which, among other things, called upon the developed countries to honour their commitment under the Tokyo Declaration to provide special and differential treatment for the developing countries, including the establishment of suitable mechanisms to take account of their development and financial needs. The negotiations on commodities, which took place in Negotiating Group III, produced a consensus resolution which called for the early completion of the drafting of the articles of agreement on the Common Fund and also urged completion of action in respect of individual commodity agreements. The resolution also emphasised the importance of adopting suitable measures regarding processing and product development with a view to promoting industrialisation and an increase in the export earnings of the developing countries. The merit of establishing a compensatory financing mechanism for commodity-related shortfalls in export earnings was the subject of heated debate. The Conference was eventually able to adopt a resolution12 which requested the Secretary-General of UNCTAD to prepare, in consultation with the International Monetary Fund (IMF), a study on the operation of a complementary facility to compensate for such shortfalls. The developed countries continued to insist, however, that while they supported the principle of export stabilisation, export shortfalls should be seen in a balance of payments context and, therefore dealt with by the IMF. Be that as it may, the decision represented something of a triumph for the Group of 77 since it was able to ensure the involvement of the UNCTAD Secretariat in the review of an issue which the developed countries felt fell within the jurisdiction of the IMF.

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Regarding monetary and financial issues, which were dealt with in Negotiating Group IV, the Conference adopted two separate resolutions dealing with international monetary reform and the transfer of resources. The first resolution 13 dealing with international monetary reform, invited the IMF to review ways of improving the terms of the Extended Fund Facility and stressed the need for the Fund to adopt a flexible approach to conditionality. It also invited the Fund to review the overall size of quotas in relation to such criteria as levels of international trade and the magnitude of balance of payments deficits. However, the Group B developed market-economy countries indicated that they could not accept certain provisions of the resolution nor the timetable for a quota review in the Fund. They also felt that the resolution called into question some of the statutes of the Fund. The second resolution14 on the transfer of real resources, contained comprehensive provisions which, among other things, urged donor countries to increase their development assistance and also called for an increase in the capital of the World Bank and the regional development banks. It further acknowledged the importance of private and other non-official resource flows to the developing countries as a means of stimulating their economic development. A number of developed market-economy countries, notably Belgium, the Federal Republic of Germany, Switzerland and the USA felt that the latter resolution did not reflect the full scope of the contribution of direct private investment to the development of the developing countries. Moreover, the United Kingdom, Switzerland and the USA indicated their inability to reach the 0.7 per cent GNP target for resource transfers to the developing countries, while Austria pointed to the difficulty of adopting a system of multi-year pledges envisaged in the resolution. The USA was also uneasy about the references in the resolution to certain practices of the World Bank regarding programme assistance, bidding and access to lending facilities. The socialist bloc countries distanced themselves from the resolution on the usual ground that they bore no historical responsibility for colonialism and, therefore, it was the developed market-economy countries which had an obligation to assist the developing countries through the increased transfer of resources. On the question of the transfer of technology and the development of the indigenous technological capacity of the developing countries which was considered in Negotiating Group V, the Conference stressed that one of the main objectives of the revision of the Paris Convention should be the promotion of an indigenous inventive capacity and the application of protective inventions designed to accelerate the development process in the developing countries. In keeping with this objective, the resolution15 identified a number of specific measures to guide the revision of the Convention.

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However, it was not possible to reach agreement on the Code of Conduct for the Transfer of Technology which, as pointed out previously, was the subject of ongoing controversy between the developed and the developing countries regarding the legally binding character of the proposed Code. Consequently, the resolution16 on the subject merely called upon the Secretary General of UNCTAD and the President of the Negotiating Conference on the Code to convene a preparatory meeting to resolve outstanding issues in order to facilitate the continuation of the work of the Conference. In contrast, there was a wider measure of agreement on initiatives designed to strengthen the technological capacity of developing countries. The resolution adopted by the Conference identified a number of measures designed to facilitate the technological transformation of developing countries, including the formulation of comprehensive technology plans as an integral part of overall national development strategies, the promotion of cooperation among developing countries in technological research, and the provision of specific support by the UNCTAD Secretariat. UNCTAD was also requested to convene expert meetings and to prepare suitable reports on the subject. The subject of shipping, which was the second item dealt with in Negotiating Group V, assumed major importance during the Conference because of the far-reaching implications of some of the proposals advanced by the Group of 77 for the future of international shipping. Altogether, the Conference adopted three separate resolutions dealing with the Code of Conduct of Liner Conferences; the participation of the developing countries in world shipping and the involvement of their merchant marines; and ship financing and technical assistance. The first resolution17 called upon governments to take the necessary steps to ensure the early implementation of the Code of Conduct on Liner Conferences18 which had been adopted in 1974 and also urged the developing countries to cooperate in order to increase the competitiveness of their liner fleets. The question of the increased participation of the developing countries in world shipping and the involvement of their merchant marines, which was the subject of the second resolution,19 provoked intense debate between the developed and the developing countries, as well as among the developing countries themselves. Several developing countries called for a gradual phasing out of open registry fleets (so-called flags of convenience), which represented one-third of world shipping, through the increase in the participation of flag states in the effective ownership of such shipping as well as in the provision of national crews. Since a number of developing countries such as Liberia, Panama, Singapore and Cyprus20 were heavily involved in the open registry regime,

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these countries had a number of reservations on the proposal. In view of the large number of seamen it provided, the Philippines was also concerned that it would stand to lose from a more equal distribution of ship personnel among countries. Among the developed countries, major international carriers such as Britain, Greece and Norway were reluctant to support the proposal for a more equitable distribution of world shipping. In the resolution adopted on the subject, the Conference called on governments to ensure the equitable participation of the developing countries in the transport of all cargoes with special reference to bulk cargoes generated by their foreign trade. It also urged the developing countries to cooperate in joint bulk shipping operations. The UNCTAD Secretariat was requested to carry out a number of studies on trade and maritime transport including the possibilities for expanding the bulk fleet of developing countries, the repercussions of the phasing out of flags of convenience21 and its impact on the development of the developing countries. In addition, the Secretariat was requested to investigate the feasibility of establishing a legal mechanism for regulating the operation of open registry fleets. The Group B developed market economy countries voted against the resolution on the ground that its provisions were inimical to free competition, which they felt was a critical feature of the carriage of bulk cargo. They felt that the introduction of cargo sharing would increase transportation costs and also have adverse effects on the trading interests of all countries. Moreover, Liberia, because of its special interests as a major ‘flag of convenience’ country, made it clear that the mandate given to the UNCTAD Secretariat under the terms of the resolution was to study the feasibility of establishing and not to establish a legal mechanism for regulating the operation of open registry fleets. The Conference also adopted a resolution on ship financing which, among other things, requested assistance for developing countries to purchase new and second-hand ships and for the improvement of port facilities and infrastructure. On the problems of the least developed countries, which were dealt with in Negotiating Group IV, the Conference adopted a resolution22 which contained an action plan setting out specific measures to be carried out during the period 1979–1981 and a longer term plan for the 1980s in support of these countries. Although the Group B countries supported the resolution as a whole, they expressed reservations on a number of specific points. For example, they argued that they could not assume obligations to increase their assistance beyond those embodied in previous agreements with the developing countries. They were also generally concerned about the financial implications of strengthening the UNCTAD Secretariat to deal with the problems of the land-

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locked23 and island24 developing countries which contained many of the provisions already included in similar resolutions adopted at UNCTAD IV. Moreover, the Group B countries reiterated their well-known position that they preferred to provide assistance to the land-locked countries through existing bilateral and multilateral channels rather than through a new fund. The resolution on economic cooperation among developing countries (ECDC) 25 turned out to be one of the most comprehensive and constructive adopted by the Conference. It called upon developed countries and international organisations to provide appropriate support to programmes of ECDC. In particular, it was emphasised that the assistance provided by the UNCTAD Secretariat in support of programmes of ECDC should be improved and intensified. Moreover, the Conference decided to convene in early 1980 a special session of the Committee on ECDC – which functioned as a main committee of the Trade and Development Board – to consider measures to advance the objectives of ECDC. Certain aspects of the resolution were the subject of prolonged negotiations between the developed and the developing countries. This was particularly true in respect of the section dealing with the assistance that was to be provided by the UNCTAD Secretariat to meetings of the developing countries in support of ECDC. Previous resolutions26 adopted by the UN General Assembly had sanctioned the general principle that UNCTAD should provide such support. However, during the Thirty-Third Session of the Assembly the developed market-economy countries re-opened the discussion on the subject with a view to limiting the support provided by the UNCTAD Secretariat to meetings of the developing countries. The question was, therefore, referred to the Trade and Development Board for further consideration. In view of the failure of the Board to resolve the controversy between the developed and developing countries on the issue, it fell to UNCTAD V to find a solution. During the Conference, the developed countries argued that a decision to permit the UNCTAD Secretariat to provide support only to the developing countries would be inconsistent with the universal character of the organisation. In the end, a compromise formula was adopted whereby the Secretariat was permitted to provide assistance for a specific number of meetings of governmental experts of developing countries prior to the special session of the Committee on ECDC in order to carry out the preparatory work in connection with the establishment of a global system of trade preferences among developing countries, cooperation among state trading organisations of developing countries, and the establishment of multinational marketing enterprises, on condition that the Secretariat would provide similar support for meetings requested by other regional groups for this purpose. In addition,

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the Trade and Development Board was requested to consider the need for other meetings of this kind in the future. Another issue which provoked controversy was the initial insistence by the developed market-economy countries on to participating in discussions relating to the formulation of programmes of ECDC. This was emphatically rejected by the developing countries on the ground that the formulation of such programmes was a matter for the developing countries themselves, even though a support role was conceded for the developed countries and international institutions in furtherance of the objectives of ECDC, as defined by the developing countries. This principle was reflected in operative paragraph 2 of the resolution adopted by the Conference. Following the adoption of the resolution, the Group D (socialist bloc) countries expressed reservations regarding the implications of the mandate given to the UNCTAD Secretariat to support meetings of the developing countries on ECDC, which they felt would impose an additional burden on the budget of the Secretariat. This action on the part of the socialist bloc countries was quite surprising in light of the general support they had previously expressed for the aspirations of the developing countries. Finally, on the question of institutional issues, which were considered in Negotiating Group I, the Conference invited the UN General Assembly to take appropriate action to strengthen UNCTAD.27 It also requested the Secretary General of UNCTAD to enter into consultations with the Secretary General of the UN in order to obtain a delegation of authority in budgetary and administrative matters and in the organisation of its conferences and administrative support services. Because of the absence of agreement on their content, a number of resolutions had to be referred to the permanent machinery of UNCTAD for further consideration and appropriate action. These included proposals on trade relations among countries having different economic and social systems (which was submitted by the USSR on behalf of Group D); the debt problems of the developing countries (submitted by Cuba on behalf of the Group of 77); international financial cooperation; transnational corporations and international commodity trade (submitted by the German Democratic Republic on behalf of Group D); and the transfer of real resources to the developing countries (submitted by Cuba on behalf of the Group of 77). In addition, the Conference decided to remit the items dealing with the review and evaluation of the Generalised System of Preferences and also the review of resolutions 96 (IV) and 97 (IV) dealing, respectively, with the diversification of exports of manufactures and semi-manufactures of developing countries and the role of transnational corporations in the expansion of the trade in manufactures and semi-manufactures.

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Although the tough bargaining position adopted by the developed countries was a critical factor standing in the way of agreement on several issues, a number of other factors also contributed to the rather limited results of the Conference. Firstly, the convening of simultaneous meetings of the several negotiating groups placed many developing countries at a disadvantage because of the small size of their delegations. For this reason, many delegations found it difficult to maintain a coherent view of the overall negotiations. Secondly, during the course of the Conference, the Group of 77 met infrequently and this tended to reduce the effectiveness of the Group in the negotiations. While the failure of the Group to meet more frequently was due to the large number of meetings held during the Conference, it also reflected a conscious attempt by some developing countries to emphasise the primacy of the interests of the regional groups rather than those of the Group of 77 as a whole, notwithstanding the specific agreements reached among the developing countries in Arusha. This strategy suited the Latin American Group, which perhaps felt that its interests would be subordinated to those of the African and Asian groups in the wider Group of 77 because of the numerical dominance of these groups. As previously pointed out, the economic interests of the Latin American countries often conflicted with those of the African, Caribbean and Pacific (ACP) countries because of the special preferences enjoyed by the latter countries under the EEC-ACP Lomé Convention. The Caribbean countries, therefore, found themselves in an awkward position as members of the Latin American Group but with economic interests much closer to those of the ACP countries. Because the group system had taken hold in UNCTAD, the developing countries faced a major challenge in seeking to reconcile regional interests with the wider needs of the Group of 77. The failure to do so during UNCTAD V limited the ability of the developing countries to pressure the developed countries which were obviously determined to resist demands for any fundamental change in the structure of the international economic system. Finally, the unity and solidarity of the Group of 77 were temporarily disrupted by the controversy which surfaced among the developing countries during the Conference as a result of the proposal by some developing countries to include energy on the agenda. The initiative, which was promoted by some Central American countries, was stoutly resisted by the OPEC countries which had always been opposed to attempts to discuss energy, either in the Group of 77 or in international conferences, unless it formed part of a carefully constructed package of issues. Much time was spent by the developing countries

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in resolving this issue. With such a distraction, it was difficult for the developing countries to maintain a consistently united front against the firm stand taken by the developed countries during the negotiations. Nevertheless, the controversy on energy underlined the urgent need for the developing countries to resolve the issue among themselves, as a basic precondition for preserving their political unity and solidarity in the negotiations with the developed countries. In his closing remarks, the President of the Conference stated, somewhat philosophically, that, while UNCTAD V could claim no major achievements, it had suffered no major defeats. Moreover, he felt that the spirit of UNCTAD was preserved in that the Conference had succeeded in ensuring an effective exchange of ideas. Given the meagre results of the Conference, this was a rather optimistic assessment of its outcome. However, this was perhaps not unexpected from the host country that had spent so much time and energy in seeking to make the Conference a success.

The Ministerial Meeting of the Non-Aligned Coordinating Bureau, Colombo, June 1979 Even before the dust had settled on the proceedings in Manila, the delegates of several developing countries set out to attend the ministerial meeting of the Coordinating Bureau of the Non-Aligned Movement which was held in Colombo, Sri Lanka, from June 4–9 1979. Although the Colombo meeting was preoccupied with a number of political questions, such as the representation of Kampuchea and the attempt by some Arab countries, most notably Syria, to expel Egypt from the Non-Aligned Movement because of its acceptance of the Camp David Accords and the signing of a separate peace treaty with Israel, it did seek to address a number of important economic issues. In this regard, the Bureau called upon the developing countries to ensure the effective coordination of their policies with respect to negotiations with the developed countries and also to increase economic cooperation among themselves both as a means of accelerating their development and as a strategy for improving their bargaining position. However, the discussions on these issues were marked by a number of potentially conflicting tendencies, both in terms of the means of preserving the political and economic solidarity of the developing countries, as well as the strategy to be pursued in advancing the dialogue on the establishment of the New International Economic Order. On the question of the promotion of solidarity among the developing countries, a number of delegations advanced proposals which they felt would serve to improve the economic situation of all developing countries and,

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therefore, increase their capacity to sustain the dialogue with the developed countries. Firstly, with the experience of Manila still fresh in its memory, Jamaica proposed that the question of energy be placed on the agenda not only because of the need for the developing countries to adopt a common strategy in order to avoid public controversy at international meetings but also because of the intrinsic importance of energy in the economic development of the developing countries and the fact that the subject transcended the narrow preoccupation of the OPEC countries with petroleum. In spite of the logic of the Jamaican proposal, particularly against the background of the Manila controversy, the OPEC members of the Bureau were opposed to any substantive discussions on the subject. As a result, the meeting decided that the subject should be discussed in the context of global negotiations with the developed countries. A second initiative came from Iraq, which circulated to the meeting a document analysing the impact of inflation on the economies of the developing countries. The document suggested that the bulk of the inflation which affected the developing countries was transmitted directly from the developed countries with only a small portion being attributable to the oil-producing countries. Consequently, Iraq proposed the establishment of an international fund to assist the developing countries in alleviating the adverse effects of inflation. Many of the non-oil-producing developing countries participating in the meeting were reluctant to endorse the analysis of the cause of inflation contained in the Iraqi document and were even less enthusiastic in accepting the proposal for a Fund because its establishment depended on contributions from both the developed and the developing countries. Moreover, it was felt that the focus on inflation was much too narrow to encompass a satisfactory solution to the problems faced by the non-oil-producing developing countries. Nevertheless, in order not to appear to stand in the way of the search for solutions, the Bureau recommended that an intergovernmental group should study the details and implications of the Iraqi proposal and submit a report to the Sixth Summit of the Non-Aligned Movement, which was due to be held in Havana in August 1979. A third proposal advanced at the meeting came from Guyana, which urged the convening, prior to the Havana Summit, of a meeting of a select number of developing countries to discuss ways of reinforcing mutual assistance and solidarity in the context of the principle of collective self reliance. The purpose of this proposal was to provide a framework for a full and open discussion of issues which stood in the way of unity and solidarity among the developing countries. It was also designed, among other things, to identify practical ways of dealing with the question of the impact of increased oil prices on the

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economies of the non-oil-producing developing countries. The proposal was initially strongly resisted by the OPEC members of the Bureau, led by Algeria, on the ground that the Iraqi proposal was adequate to deal with the problem. However, in the face of the strong support for the proposal from the non-oilproducing countries, the Bureau finally decided to accept the invitation of the Government of Guyana to host a meeting on the subject. The final initiative at the meeting, which was advanced by Algeria, was significant because of its implications for the future of the dialogue on the New International Economic Order. The Algerian proposal recommended that the Sixth Non-Aligned Summit should consider the desirability of launching a round of global negotiations on international economic issues. The proposal was endorsed in the expectation that the proposed Baghdad meeting on the Inflation Fund and the Georgetown meeting on Collective Self-Reliance and Mutual Assistance would produce positive and constructive recommendations aimed specifically at dealing with the problems faced by the non-oil-producing developing countries which could be incorporated in an overall Third World strategy for bringing about change in the international economic system. The Colombo meeting was, therefore, significant in that it took a number of important decisions which formed the basis for the subsequent elaboration of policy both in terms of the promotion of economic cooperation among developing countries and the pursuit of the North-South dialogue.

The Eleventh Special Session of the UN General Assembly, 1980 The disappointing results of UNCTAD V and the failure of the Committee of the Whole established under resolution 32/174 to significantly advance agreement on a number of outstanding issues tended to produce a virtual stalemate in the negotiations on the New International Economic Order. This stalemate in the negotiations, which was characterised by a progressive hardening in the bargaining position of the developed countries by the end of the 1970s as a result of the changing balance in the economic power of the developed countries vis-à-vis the developing countries, stimulated a search on the part of the latter for ways of reactivating the dialogue. The Sixth Non-Aligned Summit held in Havana in August 1979, acting on the recommendation of the Ministerial meeting of the Coordinating Bureau which met in Colombo in June 1979 immediately following the conclusion of UNCTAD V, adopted a resolution calling for the resumption of global negotiations between the developed and the developing countries on the establishment of a new international economic order.28

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In pursuance of the resolution of the Havana Summit, the UN General Assembly decided at its Thirty-Fourth Regular Session held September 18, 1979 to January 7, 1980 to launch at its special session in 1980 a round of global negotiations on international economic cooperation for development, which it stipulated should be action-oriented and designed to ensure a coherent and integrated approach to the issues under negotiation. The Assembly further agreed that the negotiations should take place within the UN system, with the participation of all states, within a specified time-frame. The negotiations were to include the major issues in the field of raw materials, energy, trade, development, and money and finance and were also to contribute to the implementation of the International Development Strategy for the Third United Nations Development Decade and to the solution of international economic problems. It was also reiterated that the Committee of the Whole established under General Assembly resolution 32/174 should serve as the Preparatory Committee for the negotiations. To this end the Committee was requested to submit to the Eleventh Special Session recommendations on the procedures, time-frame and detailed agenda for the global negotiations. This was the background of the Eleventh Special Session of the General Assembly held August 25 to September 15, 1980 which was confidently expected to lay the basis for the resumption of global negotiations between the developed and developing countries on the New International Economic Order. During the special session, the Assembly established an Ad Hoc Committee to consider the issue of global negotiations and the adoption of a New International Development Decade. However, despite extensive consultations between the developed and the developing countries during the course of the session, no agreement was reached on the terms on which the negotiations could commence. Consequently, the Assembly merely took note of the report of the Ad Hoc Committee and decided to transmit to its thirty-fourth session the documents relevant to the global negotiations on the issue of international economic cooperation for development.29 The overall results of the Eleventh Special Session made it clear that agreement between the developed and the developing countries on the specific terms and conditions for launching a new round of global negotiations relating to the creation of a new structure of international economic relations would be extremely problematic.30

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The International Development Strategy for the Third United Nations Development Decade The adoption in 1980 of a New International Development Strategy for the 1980s represented an important achievement by the international community, despite the failure to achieve progress in the North-South negotiations on the New International Economic Order. In 1978 the Thirty-Third Session of the General Assembly established a Preparatory Committee to make the necessary arrangements for the drafting of the Strategy. Based on the work of the Preparatory Committee, which met in several sessions between February 1979 and August 1980, the General Assembly was able to adopt at its Thirty-Fifth Session the International Development Strategy for the Third United Nations Development Decade.31 The Strategy established a number of quantitative and qualitative targets, and identified corresponding policy measures in a wide range of areas such as international trade, industrialisation, food and agriculture, financial resources for development, international monetary and financial issues, technical cooperation, science and technology for development, energy, transport, economic and technical cooperation among developing countries, least developed countries, most seriously affected countries, developing island countries and land-locked developing countries, the environment, human settlements, disaster relief and social development. The strategy also contained specific provisions for the review and appraisal of its implementation at the sectoral, regional and global levels, as well as by individual governments. The first global review and appraisal was scheduled to be carried out by the General Assembly during 1984. Compared with the previous Strategy for the 1970s, the Strategy for the Third UN Development Decade represented an important new departure in terms of its explicit reference to the need for structural change in the international economic system as a basic precondition for development which had been the subject of debate between the developed and the developing countries since the Sixth Special Session in April 1974. Moreover, apart from its reference to traditional issues such as international trade, industrialisation, agriculture and science and technology, it included new elements such as the environment and human settlements. In addition some concession was made with regard to the ‘basic needs’ of the poorest sectors of the population against the background of the emphasis on the importance of the social aspects of development. The debate on the Strategy, which took place in the meetings of the Preparatory Committee, reflected the well-known conceptual differences

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between the developed and the developing countries, with the latter emphasising that the primary objective of the Strategy should be the promotion of development and the former seeking to focus on the wider issue of global economic prosperity. Moreover, the developing countries sought to locate the Strategy unequivocally within the broader objective of efforts to achieve the establishment of the New International Economic Order. The developed countries, on the other hand, were somewhat reluctant to concede this link. In the end, the view of the developing countries prevailed. Consequently, the first paragraph of the preamble expressed a determination to establish a New International Economic Order and also made reference to the resolution on the subject adopted at the Sixth Special Session of the UN General Assembly. Despite its noble intentions, the Strategy failed to achieve its expressed objectives, mainly because of the persistence during the 1980s of international economic recession and the failure to launch global negotiations aimed at resolving the major outstanding issues in the area of development and international economic cooperation.

Cancun (October 1981) In the face of the continuing international economic crisis and the stalemate in the North-South Dialogue, President Jose Lopez Portillo of Mexico took the initiative to convene in Cancun a meeting of a select number of leaders from both developed and developing countries to discuss the problems of the world economy on the basis of an open agenda.32 The participants at the meeting exchanged views on a number issues, including food security and agricultural development; industrialisation; international trade including commodities; energy with special reference to the proposal for a World Energy Plan and the need for increased energy investment in the developing countries; and monetary and financial issues. Under the last item, discussion focused on such varied issues as the balance of payments problems of developing countries, the problem of high interest rates, the creation and distribution of international liquidity, the role of Special Drawing Rights (SDRs), IMF conditionality and the decision-making process in the international financial institutions. Although there were no formal agreements at Cancun, the main conclusions of the meetings were summarised by the two co-chairmen, President Jose Lopez Portillo of Mexico and Prime Minister Pierre Elliot Trudeau of Canada, both of whom stated that the meeting had agreed to support the launching of global negotiations within the United Nations system. Despite this assurance, the extent of the US commitment to this process was still not

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clear. Certainly, it seemed that the US agreement to participate in the preparatory process leading to global negotiations was subject to a number of conditions which stipulated that the negotiations should, among other things, deal with specific subjects such as trade liberalisation, energy, food and investment; respect for the independent status of institutions such as the IMF, World Bank and the GATT; and should be oriented to the achievement of growth and development mutually beneficial to the developed and developing countries. Notwithstanding this effort at summit diplomacy on international economic issues and the qualified support for embarking on a preparatory process leading to the launching of global negotiations, the subsequent discussions which took place between the developed and the developing countries during the Thirty-Fifth Session of the General Assembly which was held towards the end of 1981, failed to provide agreement on the terms and conditions for launching the negotiations.

UNCTAD VI (June 1983) In the wake of the continuing lack of progress in the negotiations on the New International Economic Order, UNCTAD VI held out little hope for any significant breakthrough in the negotiations, even though the agenda of the Conference dealt with a number of issues of traditional concern to the international community and, more particularly, to developing countries. In keeping with its usual practice, prior to the conference, the Group of 77 met in ministerial session in Argentina March 28 to April 9, 1983 and adopted the so-called Buenos Aires Platform33 which set out their position on the various issues that were to be discussed at UNCTAD VI. In addition, the document stressed the urgency of launching, at UNCTAD VI, a concerted programme aimed at reactivating the world economy and promoting the accelerated development of the developing countries. It also reaffirmed the need to adopt an integrated set of policies in the fields of commodities, trade, money and finance, and development aimed at promoting the establishment of the New International Economic Order. In terms of the specific agenda items, UNCTAD VI considered issues dealing with the least developed, land-locked and developing island countries; economic cooperation among the developing countries; shipping; the technological transformation of the developing countries; the Common Fund and the Integrated Programme on Commodities; external debt; international monetary policy; export credit; official development assistance; coercive economic measures; compensatory financing of export earnings shortfalls; and relations between countries having different economic and social systems.

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The resolutions adopted by the Conference on the least developed, landlocked and developing island countries, by and large followed the pattern of those adopted by the two previous Conferences. However, in reviewing progress in the implementation of the Substantial New Programme of Action for the least developed countries, the Conference stressed the critical importance of the International Development Association to these countries and called upon governments to replenish its resources at an adequate level. It also urged donor countries to provide official development assistance (ODA) to the least developed countries in an untied form. In addition the Conference called upon developing countries in a position to do so to increase their assistance to the least developed countries in the context of the promotion of economic cooperation among developing countries. The resolution on economic cooperation among developing countries was fairly comprehensive and sought to build upon a similar resolution adopted at UNCTAD V. Among other things, it requested the Trade and Development Board and the Committee on Economic Cooperation Among Developing Countries to continue to provide support to the work being carried out in respect of the Global System of Trade Preferences (GSTP) among developing countries. It also called for cooperation among state trading organisations (STOs), the establishment of multinational marketing enterprises (MMEs), the promotion of multinational production enterprises (MPEs), and financial cooperation among the developing countries, including an examination of the proposal for the establishment of the Bank of the Developing Countries. In addition, the Committee on ECDC was requested to consider the adoption of additional measures in support of the Arusha Action Plan and the Caracas Programme of Action on economic cooperation among developing countries. As will be argued in a later chapter, the measures embodied in the resolution were of potential importance since the proposed areas of cooperation among the developing countries could have provided the basis for a fundamental transformation of the structure of international economic relations. In respect of the major issues of external debt and international monetary reform, the resolutions adopted by the Conference contained little that was new. For example, the resolution on debt invited the developed countries to consider the adoption of measures to alleviate the debt service of developing countries resulting from official and officially guaranteed loans and also stressed that debt restructuring should assist debtor countries to establish their creditworthiness. The resolution on international monetary issues dealt with such conventional preoccupations as the provision of adequate resources for the IMF, SDR allocations, conditionality, and surveillance carried out by the Fund.

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The measures adopted in respect of official development assistance (ODA) did, however, contain some new features. Apart from urging the developed countries to reaffirm their commitment to the IDS target of 0.7 per cent of GNP for ODA, it also urged donor countries to double their ODA to the least developed countries by 1985 or as soon as possible. The resolutions on the technological transformation of the developing countries and shipping sought to carry forward the measures adopted by UNCTAD V on these subjects and also identified some new areas of action for the UNCTAD Secretariat. The resolutions on the Common Fund and the Integrated Programme on Commodities were designed to ensure the completion of the necessary international action in order to bring the Programme into operation at an early date. The resolution on coercive economic measures which called for the rejection of trade restrictions, blockades, embargoes and other sanctions adopted by the developed countries which were considered incompatible with the provisions of the UN Charter had to be put to the vote. Although it was supported by the developing countries, the majority of developed countries voted against the resolution while others abstained.34 Similarly, the resolution35 on compensatory financing of shortfalls in export earnings which requested the UNCTAD Secretariat to convene an expert group to consider complementary measures designed to compensate for such shortfalls experienced by the developing countries was opposed by the United States. A number of other countries abstained in the vote on the item. Finally, in the absence of agreement, the Conference decided to remit to the Trade and Development Board the text on the subject of trade relations among countries having different economic and social systems. Regarding the main agenda item dealing with the world economic situation with special emphasis on development, the Conference adopted the report of the Working Group appointed on the subject. A statement which was annexed to the report called, among other things, for concerted measures to reactivate the global economy and to accelerate the growth of the developing countries. In addition, it urged the adoption of a programme of structural change in the global economy as a basic pre-condition to achieve these objectives. However, the US dissociated itself from the statement. The debate on this agenda item, as was the case at UNCTAD V, underlined the continuing difference in perception between the developed and the developing countries on the need for fundamental structural change in the international economy. It was also clear from the discussion that the developed countries preferred to rely on the IMF and the World Bank to regulate international economic activity rather than recognise the competence of UNCTAD to deal with this issue.

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In the absence of the identification of any new initiative, UNCTAD VI had to be content merely to seek to advance initiatives taken at previous conferences, such as those relating to the Common Fund and the Integrated Programme on Commodities. As was previously pointed out, the Conference was unable to significantly advance agreement on structural change in the international economic system. While this failure reflected the continuing stalemate in the North-South Dialogue on the New International Economic Order, it nevertheless underlined, in the minds of the developing countries, the need for the resumption of serious negotiations at the global level on the major economic issues facing the international community.

Post-UNCTAD VI Developments In pursuance of the decision taken at the Sixth Non-Aligned Summit held in Havana in August 1979, the Thirty-Fourth Session of the General Assembly decided to launch at its Eleventh Special Session held in 1980 a round of global negotiations on development and international economic cooperation. However, as was mentioned earlier, the Eleventh Special Session was unable to reach agreement on the specific terms and conditions for launching such negotiations. At its Thirty-Fifth Session, the Assembly requested its President to continue consultations on the subject. In view of the fact that the consultations failed to produce agreement, the General Assembly decided at its Thirty-Sixth Session to include the subject on the agenda of the Thirty-Seventh Session. The latter session in turn decided, on the proposal of the President, to keep the agenda item open in order to allow consultations to continue after the formal suspension of the session and to reconvene at short notice to consider any agreements which might emerge from such negotiations. In light of the lack of real progress in the negotiations, the Seventh NonAligned Summit, which met in New Delhi in March 1983, sought to modify the original approach to the relaunching of global negotiations by proposing a phased approach to the negotiations. This approach involved the adoption of a Programme of Immediate Measures in areas of critical importance to the developing countries, and the urgent convening of an International Conference on Money and Finance, with universal participation, with a view to restructuring the existing international monetary, trade and financial system as a basis for launching global negotiations. In her capacity as chairperson of the Non-Aligned Movement, Mrs Indira Ghandi held informal discussions in New York September 27–29, 1983 with a number of leaders from both developed and developing countries, during which she reiterated the approach to the negotiations endorsed by the Summit.

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Subsequently, the Foreign Ministers of the Non-Aligned Countries and the Foreign Ministers of the Group of 77, who met in New York in early October 1983, reaffirmed the strategy sanctioned by the Non-Aligned Summit. Discussions on the subject continued during the Thirty-Eighth Session of the UN General Assembly. Nevertheless, it was clear during these discussions, that some developed countries were committed to ensuring that the role of the United Nations, and more particularly the General Assembly, in the negotiations would not affect the integrity and competence of institutions such as the World Bank and the IMF, which the developed countries had always insisted should not be bound by UN General Assembly resolutions. The developing countries, on the other hand, while respecting the integrity of these institutions, felt nevertheless that the role of the General Assembly was crucial in order to provide an integrated and coherent approach to global negotiations. Some developed countries also sought clarification on the linkage between the two phases of the negotiations proposed by the developing countries, while others saw the proposal for an international conference on money and finance as problematic if the intention was to seek to create new structures in this field. Some developed countries, such as the United States and Japan, stressed the need for the developing countries to place greater emphasis on internal efforts in seeking to promote their development rather than placing excessive dependence on the international economic system. The promotion of a free enterprise system was also seen by these countries as an important vehicle for promoting development. By and large, the developed market economy countries felt that the international economic system provided an adequate framework for dealing with the problems of both developed and developing countries. However, the socialist bloc countries was sympathetic to the position of the developing countries and supported the call for global negotiations. In the context of the persistence of these differences and the hardening of the position of a number of developed countries, it proved impossible to actually launch the proposed global negotiations even on the modified basis proposed by the developing countries. It became clear, therefore, that the search for a satisfactory solution to this question presented a major challenge to international diplomacy. By 1984, it was also evident that even if the negotiations were to take place, the possibility of extracting major concessions from the developed countries on structural change in the global economy would be quite remote, unless the developing countries were able to establish an effective countervailing power to sustain their bargaining position. This question is dealt with in Chapter 7, but it is necessary to first compare the strategies pursued by the developed and the developing countries in the negotiations that took place on the New International Economic Order during the period 1974–1984.

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NOTES 1. 2.

3.

4.

5. 6. 7. 8.

9. 10.

11.

12. 13. 14. 15. 16. 17.

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For a full description of the functions of the Committee see Resolution 32/174. Idriss Jazairy of Algeria was elected as the representative of the Group of 77 to Chair the Committee for 1978, but it was decided that the Chairmanship would be rotated in subsequent years between the other two groups, namely, the developed market-economy countries and the socialist bloc. Of course, at the time some developed countries, most notably Sweden and the Netherlands, had either nearly reached the 0.7 per cent GNP target or had exceeded it, although the majority of countries had hardly reached half the target. See the statement by the USA in the Annex of the Report of the Committee: Volume I, General Assembly Official Records: Thirty-third Session, Supplement No. 34 (A/33/34). These sessions were held from January 18–31; March 19–29; and September 10–19. The proposal for the initiation of global negotiations was endorsed by the Sixth Non-Aligned Summit held in Havana in August 1979. See Resolution 34/138. By September 1983, the conditions for the entry of the Agreement into force had still not been met since, although it had been signed by 110 states and ratified, accepted or approved by 64 others, their contributions accounted for only 41.47 per cent of the Fund’s capital – see the Report of the UN Secretary General to the Thirty-Eighth session of the General Assembly on the ‘Status of the Agreement establishing the Common Fund for Commodities’ contained in document A/38/487 dated 14 October 1983. The Common Fund eventually came into force in 1989 and now has 104 member countries plus the European Union, the Organisation of African Unity and the Common Market for Eastern and Southern Africa (COMESA). It is governed by a Governing Council and an Executive Board which is advised by a Consultative Committee. The Managing Director of the Fund serves as the Chairman of the Executive Board. See Resolution 165 (S-IX). In a follow-up Resolution 222 (XXI) adopted in September 1980, the Board requested developed donor countries to continue to adopt retroactive adjustment or equivalent measures and identified further detailed measures for consideration by donors. See TD/B/866 dated July 15, 1981 entitled ‘Implementation of Section A of Trade and Development Board resolution 165 (S-IX) – Debt and Development Problems of Developing Countries’ – report by the UNCTAD Secretariat. The resolution was adopted by 73 votes to 12 with 14 abstentions, and thus underlined the large measure of disagreement which existed on the issue. See Resolution 128 (V) which was adopted by 69 votes to 17 with 13 abstentions. See Resolution 129 (V) which was adopted without dissent. See Resolution 101 (V) which was adopted without dissent. See Resolution 113 (V) which was also adopted without dissent. See Resolution 106 (V).

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18.

19. 20. 21.

22. 23. 24. 25. 26. 27. 28.

29. 30.

31. 32.

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The Code provided, among other things, for 40 per cent of liner cargo to be carried by ships from the exporting countries, 40 per cent by ships from the importing country and the remaining 20 per cent by so-called cross-traders. It should be mentioned that although exports from the developing countries accounted for approximately 61 per cent of world sea-borne cargo, these countries accounted for only 8 per cent of world shipping tonnage. The situation was even worse in the case of bulk cargo where the developing countries accounted for only 6 per cent of world tonnage. For a discussion of the subject, see, for example, Anthony Renouf, ‘The UNCTAD Liner Code: A Critical Dissent,’ IDS, January 1980/v. 11 No. 1. See Resolution 120 (V). See Resolution 120 (V). In exchange for the payment of a fee, many developing countries served as ‘flags of convenience’ and, therefore, these countries had larger fleets carrying their flags than many developed countries. See Resolution 121 (V) which was adopted by 91 votes to none with 23 abstentions. See Resolution 123 (V). See Resolution 111 (V). See Resolution 127 (V). See, for example, operative paragraph 4 of General Assembly Resolutions 31/ 119 dated December 1976, and 33/195 dated 29 January 1979. See Resolution 114 (V) which was adopted without dissent. While not opposed in principle to the resumption of the negotiations, a number of non-oil-producing developing countries, including Guyana, India, Jamaica, Liberia and Yugoslavia, sought to extract concessions from the OPEC countries in respect of the impact of increased oil prices on their economies which they saw as critical to the preservation of the solidarity of the developing countries in their negotiations with the developed countries. However, the OPEC countries steadfastly refused to link the promotion of mutual assistance and collective self-reliance to the issue of the resumption of global negotiations. See General Assembly Official Records: Eleventh Special Session Supplement No. 3 (A/5 – 11/3). Some commentators, in reviewing the Eleventh Special Session, have argued that its outcome indicated that the time had not yet come for global negotiations – see John P. Renninger and James Zech, ‘The 11th Special Session and the Future of Global Negotiations’, UNITAR Policy and Efficacy Studies, UNITAR, New York. While this judgement is essentially correct, the real reason for the failure of the Eleventh Special Session, like earlier efforts, to advance global negotiations was the fact that the developing countries had not been able to adopt an effective strategy based on increased economic cooperation among themselves, aimed at creating a countervailing power base, that would have compelled the developed countries to engage in serious negotiations. See the Annex to resolution 35/56 dated 5 December 1980. Of the 22 representatives invited to the meeting eight were from the developed countries and 14 from the developing countries. The countries represented were: Algeria, Austria, Bangladesh, Brazil, Canada, China, France, Federal

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Republic of Germany, Guyana, India, Ivory Coast, Japan, Mexico, Nigeria, Philippines, Saudi Arabia, Sweden, Tanzania, UK, USA, Venezuela and Yugoslavia. All of the countries were represented by Prime Ministers or Presidents, with the exception of Austria, Brazil, Federal Republic of Germany and the Ivory Coast, which were represented by their Foreign Ministers. See TD 285 dated April 29, 1983, which contains the text of the so-called Buenos Aires Platform. See Resolution 152 (VI). The voting was 81 for, 18 against and 7 abstentions. See Resolution 157 (VI) which was adopted by a vote of 90 for, 1 against and 10 abstentions.

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-6A Comparative Analysis of the NEGOTIATING Strategies of the Developed and DEVELOPING COUNTRIES

H

aving reviewed the history of the negotiations on the New International Economic Order, it is important to examine the strategies pursued by the developed and the developing countries, since they had some bearing on the outcome of the negotiations. Such an examination will also enable us to compare and contrast the assumptions and approaches of the parties involved in the negotiations and thus determine possibilities for the future, particularly since some of the issues continue to be the subject of discussion between the developed and the developing countries. While they may differ on the nature and scope of its application in particular circumstances, most international relations theorists acknowledge that power exercises a dominant influence on the relations between states, although some analysts have argued that, in addition to power, interests, defined in terms of national concerns, as well as cognition, which relates to the beliefs of key policy makers, can also be used as explanatory variables in the analysis of international negotiations. The assessment of the approaches adopted by the developed and developing countries in relation to the NIEO negotiations will, therefore, be guided by the assumptions outlined in the analytical framework described above, even though primary emphasis will be placed on the uneven nature of the power relations which existed between the parties throughout most of the negotiations. It is also clear that the overall negotiating context in which the NIEO was pursued embodied elements of what Lewicki, Saunders and Minton1 have termed ‘distributive bargaining’ in which the parties in the negotiations confront mutually irreconcilable goals, as well as ‘integrative bargaining’ in which the interests of the parties are not mutually exclusive. In the case of the former, little progress is to be expected while, in the case of the latter, negotiations can lead to mutually beneficial results. An example of the former is reflected in the demand by the developing countries for a comprehensive

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restructuring of the international financial architecture underpinned by the Bretton Woods institutions which was opposed by the developed countries. The latter is exemplified by the agreement which was eventually reached on the Integrated Programme on Commodities and, in particular, the Common Fund, despite initial reservations expressed by some developed countries. It is also true that, in some instances, the perception of irreconcilability of interests, as against actual or objective disagreement, prevailed at different stages of the negotiations and, at least initially, stood in the way of agreement. These considerations will also be taken into account in the assessment of the strategies pursued by the parties to the negotiations.

Divergent Perceptions, Contrasting Approaches It should also be pointed out that the espousal of the cause of the NIEO did not arise in an intellectual vacuum but was motivated by deeply held ideological convictions which provided an interpretation of the objective reality faced by the developing countries. During the 1970s, the world view of the developing countries was shaped by an amalgam of theoretical perspectives that was heavily influenced by Latin American structuralism, of which Raúl Prebisch was the most well-known representative, various interpretations of the dependency model associated with the writings of André Gunder Frank and others, the theories advanced by Samir Amin and Arghiri Emmanuel on capital accumulation and unequal exchange, and also by socialist notions of justice and equity. In addition, the ideological stance of the developing countries derived inspiration from the analysis carried out by the UNCTAD Secretariat which adopted a progressive stance on global economic issues in keeping with Prebisch’s adage that in a world faced with economic inequality, the Secretariat could not afford the luxury of neutrality. In other words, the negotiating stance of the Group of 77 on the NIEO was informed by a fairly well-developed analytical framework. This, of course, stood in marked contrast to the world view of the developed countries which, particularly during the 1980s, was shaped essentially by the commitment to free market principles and the primary role assigned to private sector initiatives. The demand for the NIEO, with its explicit interventionist posture, therefore, ran counter to the capitalist ideology embraced by the developed countries. Not surprisingly, a major challenge encountered during the negotiations was the difficulty involved in bridging this fundamental ideological divide. From the inception of the negotiations, the developing countries insisted that there was a need for fundamental change in the structure of the international economic system. Moreover, they sought to promote an integrated approach

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to the negotiations by linking a number of issues such as international trade; raw materials; money and finance; industrialisation; the transfer of technology; control over the activities of transnational corporations; economic cooperation among developing countries; the exercise of permanent sovereignty over natural resources; and the strengthening of the role of the UN system in the field of international economic cooperation – all of which were seen as requiring simultaneous attention if the NIEO were to become a reality. The developing countries also emphasised the need for universal participation in the decision-making process on international economic issues. For this reason, they underlined the central role of the UN General Assembly because of its democratic membership and also sought to increase their participation in institutions such as the World Bank and the IMF, which were dominated by the developed countries on the basis of a system of weighted voting determined by quota allocations. This strategy was evident in the initiatives taken by the developing countries to convene special sessions of the UN General Assembly in 1974, 1975 and 1980 devoted exclusively to economic issues and to establish a Committee of the Whole of the Assembly to monitor the ongoing negotiations on the NIEO and, where possible, to facilitate agreement between the developed and the developing countries on outstanding issues in the negotiations. In contrast to this approach, the developed countries advocated moderate and gradual reform of the international economic system and also expressed a decided preference to discuss the major issues affecting the international economy within the framework of institutions such as the IMF and the World Bank. In cases where the issues were discussed within the UN system, there was a deliberate tendency to limit the authority and jurisdiction of the General Assembly and to preserve the independence of the international financial institutions. Moreover, the GATT (which has now been superseded by the WTO), instead of UNCTAD, was seen as the preferred forum for dealing with international trade issues. More to the point, the developed countries not only emphasised their preference for more limited negotiating forums, but sought to carry on the dialogue on international economic issues outside the UN system altogether. This was the motivation behind the initiative to convene the Conference on International Economic Cooperation held in Paris. This approach reflected a carefully articulated strategy to coopt a select number of developing countries to participate with the developed countries in the discussion of international economic issues and thus limit the growing influence of the UN General Assembly. It was also designed to weaken the unity and solidarity of the developing countries which had emerged as an important factor in the negotiations.

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During the negotiations, the developed countries placed great stress on the concept of the interdependence of nations participating in the world economy, largely as a means of legitimising the status quo. The developing countries, on the other hand, argued that what was characterised as interdependence in effect represented an exploitative dependence on the developed countries. Moreover, as a general rule, the developed countries tended to see international economic management as taking priority over development which was, of course, the main preoccupation of the developing countries. The developed countries also seemed to subscribe to the view that the development of the developing countries was largely a by-product of the prosperity of the developed countries and, therefore, felt that the international community had an obligation not to take any action to endanger their prosperity. This attitude was influenced in part by the perception that the action by the OPEC countries in increasing the price of oil posed a serious threat to the continued prosperity of the developed countries. Because of this latter preoccupation, the developed countries sought to promote a discussion on energy as a separate issue. But this was resisted by the developing countries, largely at the insistence of the OPEC members who refused to discuss energy unless it was linked to the discussion of other issues such as international trade, raw materials, finance and development.

Advocacy of a Basic Needs Approach Perhaps the most important counter-offensive launched by the developed countries against the demand of the developing countries for the establishment of a new international economic order was the advocacy of a ‘basic needs’ approach to development. Stated simply, the ‘basic needs’ approach argued that the traditional approach to development with its emphasis on growth had failed to promote genuine development since it had neglected to deal with the problem of the poorest segments of the society. The basic needs approach, therefore, sought to promote a direct attack on poverty by focusing attention on activities designed to provide immediate relief to the poor. One of the earliest advocates of this approach was Robert McNamara, then President of the World Bank, who pointed to the urgency of addressing the needs of what he termed ‘the poorest of the poor’. The McNamara thesis had been articulated as early as 1972 at the time of UNCTAD III held in Santiago, Chile, during which he made reference to the ‘skewing of income’ in the Third World and the plight of the ‘bottom 40 per cent’ of the population who remained untouched by development. This theme was repeated in his statement at the annual meeting of the Bank held in Nairobi in September 1973 in which he

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referred to the ‘conditions of deprivation that fall below any definition of human decency’ and which he saw as providing the rationale for the formulation of a new poverty-oriented approach to development.2 The basic needs approach was to receive further theoretical elaboration in official publications as well as in the writings of a number of economists during the course of the 1970s and early 1980s.3 These publications emphasised the need to focus on the satisfaction of such basic needs as health, water, sanitation, shelter and transportation, both as a means of eliminating poverty and as a strategy for promoting growth. An attempt was also made to elaborate various measurements of basic needs, including a physical quality of life index (PQLI), based on research sponsored by the Overseas Development Council (ODC), which sought to highlight indicators such as life expectancy, infant mortality and literacy rates. Despite heated debates among economists regarding the theoretical validity of the ‘basic needs’ approach as a strategy of development, the concept did achieve a fleeting legitimacy during the early 1980s.4 Consequently, during the course of the negotiations, the developed countries placed increasing emphasis on the ‘basic needs’ approach as an alternative development strategy. They, therefore, argued that international economic policy should focus increasingly on the satisfaction of basic needs, with the veiled implication that external assistance should be re-oriented increasingly towards the achievement of this objective. The developing countries, while recognising the importance of the satisfaction of basic needs in their societies, felt that the achievement of overall growth was also necessary for the satisfaction of such needs. In other words, they felt that the satisfaction of basic needs was a necessary but insufficient condition for achieving meaningful development. These considerations apart, the developing countries also felt that the developed countries were seeking to exercise undue influence on their domestic economic policy and also to distract attention from the larger debate on the NIEO which posited the need for farreaching structural changes in the international economic system. Closely associated with the basic needs approach was a tendency by some commentators from the developed countries to argue that the demands of the developing countries represented an unwarranted call for the redistribution of the wealth of the developed countries. This argument was reflected in the writings of commentators such as Bauer5 and Moynihan.6 This, of course, represented a simplification and distortion of the position of the developing countries since, while the developing countries did call for increased assistance from the developed countries in support of their development effort, their essential argument was that the changes which they demanded were necessary

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not only for their own development, but for the creation of a more rational international economic system which would benefit all countries. Other commentators argued that the demands of the developing countries were not only theoretically unsound, but that, if implemented, would not necessarily guarantee the well-being of the poor in these countries. This approach is most clearly associated with the writings of Harry Johnson, Charles Kindleberger, Richard Cooper and Paul Streeten.7 Johnson, for example, attacked the proposals put forward by the developing countries in respect of the integrated programme on commodities and rejected the attempt to impose ‘a reverse imperialism for the benefit of the governments of the poor countries’.8 He also warned against ‘the facile assumption that the international transfers asked for will accrue to the benefit of the people rather than the governing elites of the poor countries’.9 Similarly, Kindleberger expressed scepticism about the possibility of any meaningful results emerging from global negotiations between the developed and the developing countries.10 As Gerald Helleiner aptly observed in 1980, the consideration of developing countries interests in world economic reforms is seriously inhibited by the intellectual ‘climate’ in the industrialised countries. Much of the argument put by Third World spokesmen or by the UN agencies (notably UNCTAD) is written off as ‘special pleading’ while alternative solutions, defensive of the established order, are regarded as close approximations to truth and reason. 11 In responding to the criticisms from certain segments of the academic community in the developed countries, Ali Mazrui observed that these writers assumed that, ‘the demand for a new international economic order is a demand for new forms of charity’ whereas it represented ‘a new basis of exchange in an interdependent world’.12 As Mazrui put it, ‘for the time being they [the developing countries] are at best caught between the indignity of charity and the ambition of economic justice. Is it surprising that they long for some new international economic order?’13

Specific Criticisms of Third World Paradigms Other writers directed their attack at some of the concepts traditionally associated with the position adopted by the developing countries in their quest for a restructuring of the international economic system. For example, the well–known conservative economist, P.T. Bauer, rejected the notion that the developed world was responsible for the underdevelopment of the developing countries. Similarly, he sought to refute the argument that the

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developing countries had suffered from declining terms of trade vis-a-vis the developed countries. Quite to the contrary, Bauer, in a strongly imperialist vein, attributed underdevelopment to the operation of domestic factors in the developing countries and saw contact with the West as the ‘principal agent of material progress’14 in these countries. The corollary of Bauer’s position on underdevelopment is that ‘the prosperity of the West was generated by its own peoples and was not taken from others’. 15 However, such an analysis involves a large measure of oversimplification. What is conspicuously lacking in the presentation is an acknowledgement of the structural relationships in the international economic system and their impact on the economies of the developing countries. Regarding the issue of the declining terms of trade suffered by the developing countries, to which Bauer refers, there is ample evidence in support of the phenomenon,16 even though it is true that the pattern has not always been consistently adverse. However, without delving further into the pros and cons of the terms of trade debate itself, it should be pointed out that the tendency to focus purely on the trade aspects of the problem fails to take account of the fact that the developing countries could obtain increased benefits through the processing of their commodities in terms of spin-off activities, not to mention the overall multiplier effect generated by such processing. In other words, the transformation of the traditional primary production orientation of these societies and the establishment of the necessary intersectoral linkages within the economy constitute an important precondition for genuine development. Some commentators went even further than Bauer and questioned the validity of the North-South model itself as a basis for the negotiation of international economic issues. In his address17 at a meeting in Tokyo in January 1982, the President of the World Bank, A.W. Clausen, described the NorthSouth model as ‘static’ and ‘oversimplified’ and argued that ‘it tends to obscure reality rather than illuminate it’. Instead, he posited a multipolar model in which he identified eight different groups of countries, namely, Western Europe, North America, Japan, Eastern Europe, the capital surplus oil exporting countries of the Middle East, the newly industrialised developing countries (NICs), the populous countries of Asia (China, India, Pakistan, Indonesia), and the poor countries of sub-Saharan Africa. This definition of the global reality focused mainly on economic criteria. It thus failed to take into account the essentially political content of the NorthSouth struggle and the fact that the South, regardless of differences in levels of development among the developing countries, had succeeded in forging a viable coalition designed to effect fundamental change in the international economic system. As the editorial in the March 1982 issue of South aptly

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remarked in response to the multipolar model of international economic relations advanced by Clausen, North-South is not an economic model or a perception or dichotomy. It is an expression of a relationship between industrialised countries of the West and the non-industrialised countries. The central element in the relationship is that of dependence . . . . The essential purpose of the global round of negotiations is to bring about such structural changes in the prevailing order that would reduce and in due course eliminate this dependence. 18 Going beyond the attempt to delegitimise the North-South paradigm, writers such as W. Scott Thompson,19 Max Beloff, Peter Bauer and Basil Yamey sought to question the existence of the Third World itself, which they saw largely as a fiction. Bauer and Yamey, in fact, saw the Third World as the creation of foreign aid. As they put it, ‘without foreign aid, there is no Third World.’20 Not only was this an ethnocentric characterisation which saw the developing countries only in relation to the policies of the developed countries, but it was a highly misleading attempt to deny the reality of the Third World in spite of the abundance of evidence in support of its existence. Clearly, the Third World could not be dismissed as a fiction, nor as a figment of the imagination. The activities of the Non-Aligned Movement and the Group of 77 which act as a political coalitions in the furtherance of objectives of the developing countries provided clear evidence of its existence as a concrete reality. Even commentators from the developing countries tended at the time to fall into the trap of uncritically accepting some of the assumptions of writers from the developed world. For example, Shihata argued that, The South’s demand for a new international economic order will be void of moral justification and therefore of credibility, in the absence of domestic economic orders which both reflect its policy makers’ concern for development issues within the framework of a just distribution of gains in these societies.21 While the goal of creating just and equitable societies in the developing world could hardly be denied – and indeed should be actively promoted – the demand for change in the structure of the international economic system was not, as Mazrui had pointed out, a question of mere morality, but was dictated instead by the recognition that the traditional structure constituted an obstacle to the development of the developing countries and, therefore, the creation of a more equitable system of international economic relations was indispensable

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to the achievement of domestic equity, as well as the promotion of sustained global prosperity.

Contrasting Approaches to the Negotiations In terms of the actual negotiations, the developing countries demonstrated a continuing faith in the negotiating process as a means of effecting the desired change in the international economic system. The developed countries, on the other hand, did not display the same enthusiasm for negotiations leading to fundamental change in the system. For this reason, they sought to stretch out the negotiations through a conscious policy of procrastination and delay and even by the employment of diversionary debates on procedural issues, as was the case in the discussions on the functions of the Committee of the Whole established by the General Assembly, as was described earlier. In doing so, they were able to postpone fundamental change or at least to control the pace of even the marginal changes which occurred. During the course of the negotiations, the developed countries also sought to exploit differences among the developing countries through the promotion of bilateral arrangements based in part on political and strategic considerations. However, despite the existence of internal tensions within the Group of 77, deriving in part from the failure to agree on a common approach to the energy issue, the developing countries were able to maintain their unity and solidarity throughout the negotiations. It was clear during the negotiations that the developed countries were fundamentally opposed to too close a monitoring of global economic issues by the United Nations General Assembly, save in the most general terms. This attitude was reflected not only in their lack of enthusiasm for the Committee of the Whole, but also in their opposition to the adoption of any legally binding codes to regulate the conduct of transnational corporations and the transfer of technology. In other words, the developed countries did not share the commitment to a democratic ordering of international economic relations as was urged by the developing countries. In passing, it should be mentioned that although the socialist bloc countries participated in the negotiations, they tended to be peripheral to the discussions since the developing countries focused their attention mainly on the developed market-economy countries. This was perhaps inevitable in view of the fact that the economies of the majority of developing countries, by virtue of their colonial origins, were more closely integrated into the international capitalist system than of the world socialist system, as it then existed.

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Moreover, the socialist bloc countries took the position during the negotiations that they were free of any historical responsibility for underdevelopment, which they saw as largely a product of colonialism for which they felt the market-economy countries bore the main responsibility. The position of the socialist bloc countries was not really convincing since, in seeking to create a more equitable international economic order, all countries of goodwill had a duty to contribute to the achievement of that objective. If anything, therefore, it was perhaps a weakness of the negotiating strategy of the developing countries that they did not seek to extract a stronger commitment from the socialist bloc countries during the course of the negotiations.

Analysis of Specific Strategies The specific strategies pursued by the parties to the negotiations on the NIEO have been the subject of review and analysis by a number of commentators, most notably Rothstein,22 Barraclough,23 Sewell and Zartman,24 who have focused both on the overall bargaining universe and on the specific processes involved in the negotiations. Rothstein argued that, notwithstanding the several difficulties in the bargaining environment, there was always the possibility of movement towards meaningful compromise in view of the existence of benefits to be gained by both sides. He attributed the lack of progress in the negotiations to the absence of sufficient flexibility, particularly on the part of the developing countries, in their insistence on major changes in the international economic system. He, therefore, advocated substantial reform of the negotiating process which he felt should be guided by the need to arrive at ‘a greater understanding of the interaction between the specific issues on the agenda and the wider political and institutional context in which they must be negotiated.’25 Rothstein, nevertheless, rejected the establishment of small negotiating groups advocated by Fred Bergsten and others, on the ground that such groups would not only have lacked legitimacy, but would have been unacceptable to the developing countries. Surprisingly, Rothstein was not wedded to the search for global rules. In fact, although he felt that rules should be tilted in favour of the developing countries, he did not believe that such rules should necessarily be implemented in a global context. Despite Rothstein’s perceptive analysis of the problems involved in the negotiations, his prescriptions remained problematic since, in the context of the mind-set of the 1970s and early 1980s the developing countries were unlikely to accept anything less than a global re-ordering of the traditional structure of international economic relations.

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Barraclough was quite sympathetic to the position of the developing countries and attributed the difficulties in the negotiations to the failure of the developed countries to see the establishment of a new international economic order as beneficial to their interests in the long term. Sewell and Zartman, while acknowledging the well-founded grievances of the developing countries, also pointed to the need to improve the negotiating process in a number of specific ways. They argued that the North-South dialogue could have benefited from the development of an improved information base. They felt that this need was particularly evident in the case of the developing countries. They also believed that the South could have benefited from the establishment of its own secretariat, somewhat analogous to that of the OECD, ‘to undertake the necessary technical, analytical and statistical work and provide advice on strategy and tactics.’26 This was undoubtedly sound advice since, while the developing countries were able to defend their positions in the negotiations, there was a clear need for systematic and ongoing research in support of their negotiating position. Sewell and Zartman saw the inability to develop a suitable formula to reflect the real interests of the parties to the negotiations as a major failure of the North-South dialogue. They believed that this failure was particularly marked in the case of the developing countries which they felt had tended to rely on ‘moral arguments’, even though there were strong economic and political arguments to be made for the reform of the international economic system. This assertion is not entirely valid, however, since the developing countries had, in fact, urged changes in the structure of the system based on the need to make it more efficient and, therefore, more capable of contributing to the prosperity of both the developed and developing countries. In any event, to place the onus entirely on the developing countries to make the case is less than fair since, if as Sewell and Zartman themselves argued, there were clear benefits to be derived on both sides from changes in the system, this should have been evident to the developed countries as well. If after ten years of negotiations this proposition was not accepted, there was not much more the developing countries could have done by way of argumentation to persuade acceptance of this point of view. Much more controversial was the proposal by Sewell and Zartman for the formation of coalitions and alliances which cut across North-South lines since this would have weakened the unity and solidarity of the developing countries as a group, which was their greatest asset during the negotiations. Similarly, they argued that the South should have sought to offer more immediate and tangible concessions to the North by way of a trade-off in order to obtain movement in the direction of effecting changes in the existing international economic system. It is difficult to see, however, what these

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concessions could have been, other than the promise of stability and the establishment of a more rational framework for international economic cooperation. The real difficulty was that, while the developing countries proceeded on the assumption that the parties to the negotiations, notwithstanding specific reservations, had accepted the Declaration and Programme of Action on the NIEO, adopted in 1974 at the Sixth Special Session of the UN General Assembly, as a framework for negotiated change in the international economic system, it became clear as the negotiations proceeded that the developed countries increasingly challenged the validity of this assumption. Moreover, in view of their belief that there was no prospect for any grand ‘global compact’, Sewell and Zartman advocated an incremental approach to change. The problem here was that the developing countries saw ‘incrementalism’ as a compromise which tended to reinforce the basic structural characteristics of the status quo, albeit with minor modification of specific elements, and therefore perceived it as a strategy by the developed countries to negate ultimately the need for more fundamental changes. Sewell and Zartman were, of course, quite correct in observing that power was an essential consideration in the negotiations. It is important to point out, however, that power is, among other things, a function of the organisation and disposition of economic resources. The developing countries, therefore, faced the challenge of identifying the most effective means of organising their collective economic resources in order to strengthen their bargaining position in the negotiations. The study by the Commonwealth Group of Experts27 on the North-South Dialogue made a number of concrete proposals for improving the negotiating process, including the reduction of the length of the agenda and the quality of documentation prepared for negotiating conferences; greater use of single issue conferences; the carrying out of negotiations in small groups rather than in plenary bodies; the increased use of expert panels to assist in the resolution of major differences and to clarify complex technical issues; the introduction of greater flexibility in the operation of the group system of negotiation; and the convening of mini-summits on specific issues. Nevertheless, the Group tended to overlook the fact that, apart from improvements in the negotiating process itself, fundamental differences in matters of substance also constituted a formidable obstacle to progress. Perhaps more accurately, the Group concluded that ‘the complacency and indifferences displayed by the developed countries’ made it necessary for the developing countries to take the initiative in seeking to change approaches and attitudes with a view to ensuring progress in the negotiations.

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Finally, in terms of the overall approach to the North-South dialogue, Bhagwati and others28 suggested a change of strategy on the part of the developing countries which combined a temporary suspension of global negotiations with the adoption of new initiatives. This approach recommended a speeding up of changes in the structure of the specialised organisations, such as the IMF and the World Bank, in order to permit greater participation of the developing countries in policy formulation in these institutions. In addition, they urged a rationalisation of the relationship between the UN and the IMF and the World Bank in which the former would provide a comprehensive view of global problems with the latter organisations taking actual decisions on specific issues. In addition, Bhagwati advocated a concentration on negotiations dealing with debt management for the ‘middle income developing countries and an increase in official development assistance to the low income developing countries.’ Finally, the strategy called for an expansion and reform of the IMF Compensatory Financing Facility (CFF). While this proposal had some merit and probably influenced the two-tier approach to global negotiations adopted at the Seventh Non-Aligned Summit in New Delhi in March 1983, it is important to distinguish between a temporary suspension of the dialogue in the form of global negotiations and an abandonment of the commitment to the principles of the NIEO which, at the time, the developing countries firmly believed should continue to provide the overall framework for future changes in the international economic system.

The OPEC Factor Beyond the specific strategies pursued by the parties to the negotiations, the broader policies pursued by the two sides, as well as developments in the international economy during the 1980s were also important in determining the outcome of the negotiations. The action by the OPEC countries in quadrupling the price of oil from $3.03 per barrel in 1973 to $11.45 per barrel in 1974 succeeded in transferring significant financial resources to these countries. As a result, OPEC current account surpluses rose from $6 billion in 1973 to $68 billion in 1974.29 These developments underlined the potential use of oil as a weapon against the developed countries. The prospect of continued unilateral oil price increases forced the developed countries to the bargaining table during the Sixth Special Session of the UN General Assembly in April 1974, during which the developing countries were able to extract a qualified commitment to the establishment of a New International Economic Order. Oil power, and the unity and solidarity of the developing countries, had thus emerged as an important factor in international economic relations.

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The increase in oil prices was, however, not without economic costs to the non-oil-producing developing countries. Largely as a result of the OPEC action, the import bill of the non-oil-producing countries rose from $78 billion in 1973 to $124 billion in 1974. However, the developing countries maintained their solidarity in the expectation that suitable arrangements would have been worked out to lessen the impact of oil price increases on the economies of the non-oil-producing countries and also that their perseverance in joint action would secure a fundamental transformation of the international economic system. In response to the perceived economic threat posed by the action of the OPEC countries in terms of the oil embargo against the United States and the Netherlands, and the significant transfer of wealth to these countries as a result of the quadrupling of oil prices, the developed countries set about establishing an energy policy designed to limit their dependence on imported oil. In pursuance of this objective, the then US Secretary of State, Dr Henry Kissinger, proposed the formation by the developed countries of an organisation to formulate joint policies in the field of energy. This initiative resulted in the formation, in November 1974, of the International Energy Agency (IEA)30 as an autonomous body within the framework of the Organisation for Economic Cooperation and Development (OECD). In accordance with its International Energy Programme adopted in November 1976, the IEA agreed to reduce the ‘excessive dependence’ on oil through energy conservation, the development of alternative energy resources and increased research in energy development. Within this overall framework, the Agency agreed to lower oil imports and engage in the development of alternative energy sources, such as coal, natural gas and nuclear energy. In addition to these measures, the IEA adopted an Emergency Programme which called upon members to reduce demand by seven per cent to 12 per cent. It also required each member to maintain a stockpile of at least 96 days, building up eventually to 120 days of oil imports. The energy policies pursued by the IEA proved extremely successful. According to Robert D. Hershey Jr., the demand for oil from the OPEC countries fell in the winter of 1982 to barely half their 1979 production peak.31 Indeed, at its ministerial meeting held in Paris in May 1983, the IEA Governing Board attributed the decline in oil prices to the ‘growing efficiency in energy use and production from a widening range of sources’32 and reaffirmed its commitment to continue the basic elements of its energy policy. The blunting of the oil weapon which resulted from the policies pursued by the IEA served to weaken the economic position of the OPEC countries. This is illustrated by the fact that their current account surplus which had

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reached ‘$114 billion in 1980 was virtually halved in 1981 and disappeared altogether in 1982’.33 This change in the economic fortunes of OPEC also weakened the overall bargaining position of the developing countries during the negotiations. It should be noted that the increase in oil prices and the accompanying financial surpluses generated in its wake led to the wholesale recycling of such surpluses into the economies of the developed countries. For example, between 1972 and 1977, the foreign assets of the major oil producers, namely Saudi Arabia, Kuwait, Iran, Iraq, Qatar and the United Arab Emirates, increased from $7 billion to $117 billion, most of which was invested in the USA and Western Europe, particularly in the Eurocurrency markets.34 It was estimated, for example, that by 1981 Saudi Arabia alone had investments in Western financial markets of some $70 billion, yielding as much as $8 billion a year.35 In describing the recycling process, Field remarked that, . . . one of the most striking conclusions to be drawn from the analysis of the oil states’ monetary reserves is that in effect their surplus does a U-turn and comes straight back to be invested in the major industrial countries. . . . In fact most of the money never leaves the consumer states at all. It is simply transferred from the accounts of the oil companies in London and New York to the account of the producers in the same centres.36 Needless to say, the recycling process had the effect of improving the liquidity situation of the developed countries. As Field went on to point out ‘Britain… ran a trade deficit of $6,460m during the first 9 months of 1974 and yet its reserves increased by $590m.’37 As a result of the phenomenon of recycling, the commercial banks of the developed countries became important financial mediators in the management and disposition of OPEC surpluses. Of special relevance in this analysis is the increasing indebtedness of the developing countries which occurred during the period under review and which has continued apace up to the present time. Faced with a combination of oil price increases, inflation, a decline in export earnings and an overall reduction in official development assistance (ODA), the developing countries were forced to resort to increased borrowing from the private commercial banks to finance their development needs and balance of payments deficits. Between 1974 and 1983, the external debt of the non-oil-producing developing countries rose from $130.1 billion to $668.6 billion, with corresponding interest payments of $6.9 billion and $59.2 billion respectively.38 It is estimated that in 1980, 61 per cent of the total debt of these countries was owed to private banks, of which American banks were owed $57 billion.

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The resort to international bank borrowing was particularly marked in countries in Latin America, such as Argentina, Brazil, Mexico and Venezuela. In the case of these countries, the US and the Eurocurrency markets became major sources of loans which were often contracted at variable rates of interest at a time of a rapid increase in such rates, particularly from 1981, caused by the continuing appreciation in the value of the US dollar as a result of a tight money policy pursued by the United States in its effort to fight inflation. The external debt of these four countries stood at $260 billion in 1984.39 However, although the debt owed by the more developed developing countries constituted the bulk of the debt of the developing countries, the debt problem continued to affect all developing countries in varying degrees. During the 1980s, there was much debate on the degree of exposure of the commercial banks in the developed countries resulting from their increased lending to the developing countries and the potential threat of default. Some legislators in the United States advocated the imposition of tighter controls over the lending policies of such banks. However, this debate often ignored the serious economic implications of indebtedness for the developing countries themselves. As previously pointed out, the interest payments on the total external debt of $668.6 billion owed by the non-oil-producing countries amounted to $59.2 billion in 1983. This meant that, in approximately 12 years, the developing countries would have paid in interest alone the equivalent of the amount borrowed from the developed countries and would still be required to repay the principal itself. For this reason, the debt problem assumed the form of the payment of a tribute by the developing countries that resembled earlier forms of exploitation under colonialism.The situation could, therefore, be characterised as one of ‘debt-ploitation’, if one may take the liberty to coin an expression. The heavy debt burden of the developing countries soon gave rise to the demand for rescheduling of the debts owed by these countries. Rescheduling operations in fact increased from only two in 1975, involving some $478 million, to twenty-two such operations in 1982, amounting to over $40 billion.40 However, there was an increasing tendency for banks to charge arrangement fees for such rescheduling operations, thus further increasing the economic burden of the developing countries, even though rescheduling did provide much needed short-term relief. Consequently, although there were increasing calls for the rescheduling of debts, in order for such rescheduling to be meaningful it needed to be carried out on the basis of the stabilisation or even a reduction in interest rates. In the case of some of the poorer developing countries, an outright write-off of debts was increasingly being seen as the only feasible solution.

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There was also growing recognition that unless such measures were adopted, the developing countries would sink deeper in the morass of debt with adverse consequences for their development and for the international financial system as a whole. Of course, there was also increasing appreciation that the longer term solution to the debt problem would also depend on the adoption of specific measures designed to stimulate economic growth and development in the developing countries in order to enable them to increase their export earnings. These developments tended, to some extent, to shift attention away from the longer term issues that were central to the negotiations on the NIEO to more immediate preoccupations such as balance of payments difficulties, which affected a number of developing countries during the period and which, therefore, tended to weaken the bargaining position of the developing countries. As Sewell and Zartman observed, ‘the willingness of the North to negotiate dissipated when OPEC failed to exercise enough leverage and when commodity power was seen to be a chimera.’41 All of this occurred in just ten short years after the developing countries, or more accurately, the OPEC countries, had succeeded in effecting one of the greatest transfers of wealth in history. It became quite clear, therefore, that the developing countries would need to reassess their options and identify the most effective strategies to be pursued in seeking to bring about the desired change in the international economic system. Some of the possibilities which were available to the developing countries at the time and which are, in many respects, still relevant, are examined in the next chapter.

NOTES 1. 2. 3.

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Lewicki, Roy J., David M. Saunders and John W. Minton, Negotiations, New York: Irwin McGraw Hill, 1999, 107. For a description of McNamara’s views on the subject, see William Clark, “McNamara’s World Bank”, Foreign Affairs, 60: (Fall 1981) 167–184. See ILO Employment, Growth and Basic Needs: A One World Problem, New York, 1977; Norman L. Hicks, “Growth vs. Basic Needs: Is There a Trade Off?” World Development, Vol.7, 985–994; Norman Hicks, “Is There a Trade Off Between Growth and Basic Needs?” Finance and Development, June 1980, 17–20; Hollis B. Chenery, “Poverty and Progress – Choices for the Developing World”; Finance and Development, June 1980; M.G. Quibria, “An Analytical Defence of Basic Needs: The Optimal Savings Perspective”, World Development 10: 4, (1982), 285–291; and Paul Streeten (with Shahid Javid Burki, Mahbub Ul Haq, Norman Hicks, Frances Stewart), “First Things First: Meeting Basic Needs”, published by the World Bank, September 1982.

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4.

5.

6. 7.

8. 9. 10. 11. 12. 13. 14. 15. 16.

17.

18. 19. 20. 21. 22.

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For a discussion on the subject, see Jacques Loup, Can The Third World Survive?, (Baltimore and London: John Hopkins University Press, 1983). While not opposed to the basic needs approach, Loup pointed to some of the operational and financial difficulties involved in the implementation of the strategy. He also quotes approvingly the so-called Brandt Report (North-South: A Programme for Survival, Cambridge:MIT Press, , 1980) which pointed to the need for the basic needs approach to be located within a wider strategy aimed at the economic transformation of the economy. P.T. Bauer,”Western Guilt and Third World Poverty” in Commentary, January 1976, 31-38; P.T. Bauer and B.G. Yamey, “Against the New Economic Order” in Commentary, April 1977, 25–31. Daniel P. Moynihan, “The U.S. in Opposition” in Commentary, March 1978, 31–44. See articles and commentaries published in Jagdish N. Bhagwati (ed.). The New International Economic Order: The North-South Debate, (Massachusetts and London: MIT Press, 1977). The volume includes mainly papers for and against the New International Economic Order presented at a workshop held at MIT in May 1976. See comment by Johnson in Bhagwati (ed.)., op. cit., 360. Johnson, ibid, p.361. Kindleberger, in Bhagwati, op. cit., p.371. Gerald Helleiner, International Economic Disorder: Essays in North-South Relations, (London and Basingstoke: Macmillan Press Ltd)., 1980, 5. See comment by Mazrui in Bhagwati, op. cit., p.371. . Mazrui, ibid, p.374. P.T. Bauer, Equality, The Third World and Economic Delusion, (Harvard University Press, 1981), p.70. Bauer, Equality, The Third World and Economic Delusion, p.75. See, for example, André Gunder Frank, Dependent Accumulation and Underdevelopment, New York: Monthly Review Press, 1979, 101–103; Pierre Jalée, The Pillage of the Third World (translated from the French by Mary Klopper), (New York: Modern Reader Paperbacks, 1968, pp.44–45; Paul Bairoch (translated by Cynthia Postan), The Economic Development of The Third World, (University of California Press: Berkeley, 1975 Paperback edition), pp.123–134. See statement to the Yomiuri International Economic Society, Tokyo. These sentiments closely parallel Thompson’s assertion that ‘we live not in a bipolar world of North and South, but rather in a world of many heterogeneous parts’ – see Conclusion entitled ‘A World of Parts’ in Thompson, op. cit., p.287. See Editorial entitled, “Avaunt, Robin Hood” in South, The Third World Magazine, No. 17, March 1982, 6. See W. Scott Thompson (ed.), The Third World: Premises of U.S. Policy (revised edition), (San Francisco: ICS Press), 1983. Peter T. Bauer and Basil S. Yamey, ‘Foreign Aid: What is at Stake?’ in W. Scott Thompson (ed.), op. cit., p.117. Ibrahim F.I. Shihata, ‘The North-South Dialogue Revisited: Some Personal Reflections’, Third World Quarterly, July 1983, 3, 579. Robert Rothstein, Global Bargaining: UNCTAD and the Quest for a New International Economic Order, (Princeton University Press, 1979).

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23. 24. 25. 26. 27. 28.

29. 30.

31. 32. 33. 34. 35. 36. 37. 38.

39. 40. 41.

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Geoffrey Barraclough, ‘The Struggle for the Third World’, New York Review of Books, XXV: 17, 9 November 1979. John W. Sewell and I. William Zartman, ‘Global Negotiations: Path to the Future or Dead-end Street?’ Third World Quarterly, 6: 2.1. April 1984 Rothstein, op. cit., 6. Sewell and Zartman, 387. See The North-South Dialogue: Making It Work, Report by a Commonwealth Group of Experts, (London: Commonwealth Secretariat, 1982). Jagdish N. Bhagwati and John Gerard Ruggie (eds.), Power, Passions and Purpose: Prospects for North-South Negotiations, Cambridge, (Massachusetts: MIT Press, 1984). See in particular ‘A Statement on North-South Economic Strategy’drafted by Jagdish N. Bhagwati and Carlos Diaz-Alejandro, in Bhagwati and Ruggie (eds.) ibid, Annex. Hallwood and Sinclair, op. cit., 79. The IEA members included Austria, Australia, Belgium, Canada, Denmark, West Germany, Greece, Iceland, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Portugal, Spain, Sweden, Switzerland, Turkey, United Kingdom, and USA. France did not join since it was opposed to the oil-sharing proposal of the Agency. It will be recalled that President Giscard D’Estaing of France had taken the initiative in 1975 in proposing a broader dialogue between the developed and the developing countries on energy issues. This initiative was to form the basis for the Conference on International Economic Cooperation (CIEC). For a competent discussion of the formation of the IEA, see Albert J. Danielsen, The Evolution of OPEC, (New York: Harcourt, Brace and Jovanovich, 1982). See Robert P. Hershey, Jr., ‘Ten Years After The Oil Crisis: Lessons Still Uncertain’ in the New York Times, Sunday, 25 September 1983. See OECD Observer, No. 122, May 1983, 7. See World Economic Outlook: A Survey by the Staff of the IMF, Occasional Paper 21, (Washington, DC: IMF, 1983), 7. Hallwood and Sinclair, op. cit., 31. Hallwood and Sinclair, ibid, 49. Michael Field, One Hundred Million Dollars A Day: Inside the World of Middle East Money, (New York: Praeger Publishers, 1976), 216. Field, op. cit., 216. See World Economic Outlook: A Survey by the Staff of the International Monetary Fund, Occasional Paper 21, (Washington, DC: IMF), 1983, 200, 201 and 204, and World Economic Outlook: Occasional Paper 27, (Washington, DC: IMF 1984), 206 and 209. For the corresponding period the ratio of external debt to GDP was 22.4 per cent and 36.8 per cent and the value of debt service payments $17.9 billion and $96.6 billion, respectively. See Alan Riding, ‘The New Crisis for Latin American Debt’ The New York Times, 11 March 1984. See Herbert Wilkens, ‘The Debt Burden of the Developing Countries’ in InterEconomics, No. 2, (March/April 1983) 56. Sewell and Zartman, op. cit., 405.

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-7Economic Cooperation Among Developing Countries (ECDC) as a Strategy FOR CHANGE

T

he continuing stalemate in the North-South Dialogue on the NIEO, which had become evident as early as 1978, led the developing countries to place increased emphasis on ECDC as a strategy for promoting their development and for effecting fundamental change in the international economic system. The history of the concept of ECDC can be traced back to the early meetings of the developing countries held during the 1950s and 1960s which contained rudimentary references to the subject. For example, the Bandung Conference in 1955 expressed general support for increased economic cooperation among the developing countries of Africa and Asia. The Conference on the Problems of Economic Development1 held in Cairo in July 1962 also emphasised the importance of ECDC and urged the adoption of joint programmes and projects in the fields of education, research, trade, industry, transport, communications and technical assistance. Special emphasis was placed on the expansion of trade and also the establishment of suitable means of transport and communications as a basis for the promotion of such trade. In addition, the Conference identified the need for close cooperation among primary producers in dealing with common problems in the field of trade. Similarly, the Second Non-Aligned Summit held in Cairo in October 1964 and the Consultative Meeting of Special Government Representatives of Non-Aligned Countries held in Belgrade in July 1969 made fleeting references to the issue of ECDC, calling upon the participating countries to develop and strengthen mutual relations and cooperation. It was not until the early 1970s, however, that ECDC began to be expressed in systematic conceptual and programmatic terms. The first clear articulation of the concept can be traced back to President Nyerere’s address to the Preparatory Meeting of the Non-Aligned Countries held in Dar-es-Salaam, Tanzania, in April 1970 prior to the Third Non-Aligned Summit. In his address,

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President Nyerere advanced the notion that ECDC, by promoting the exchange of products and common experience among the developing countries, could provide the basis for an important strategy of development.

The NON-ALIGNED Action Programme Echoing the sentiments expressed by President Nyerere, the Third NonAligned Summit held in Lusaka in September 1970, in its Declaration on NonAlignment and Economic Progress, pledged itself to the promotion of selfreliance and expressed its commitment to raise the principle to the level of a priority action programme. In sketching the elements of an action programme, the Conference identified five broad areas for cooperation, namely, planning, trade and development; industrial, mineral, agricultural and marine production; the development of infrastructure; technological requirements to ensure an increase in production; and trade based on the exploitation of complementarities among the developing countries. It also decided to promote coordination and consultation between governments and relevant institutions and to carry out a periodic review and appraisal of progress in the field of economic cooperation. The Lusaka Summit, therefore, sketched the broad outlines of a programme of ECDC which served as a basis for subsequent elaboration. The Conference of Foreign Ministers of Non-Aligned Countries held in Georgetown in August 1972 proved to be of special significance in the historical evolution of ECDC, since it succeeded in converting the tentative outline of ECDC sketched in Lusaka into a full-fledged action programme in this field. It also laid the basis for the elaboration of specific institutional arrangements for the implementation of the action programme. Prior to the Conference, the host government, Guyana, organised a meeting of technical experts to formulate the elements of a possible action programme for ECDC for consideration by the Conference. Consequently, when the Foreign Ministers met, there was already a developed body of proposals containing specific recommendations for ECDC activities. It was these proposals which formed the basis for the elaboration of the Georgetown Action Programme. In its preambular section, the Georgetown Action Programme sought to define the broad objectives of self-reliance. It affirmed, among other things, that the Non-Aligned countries bore the major responsibility for their development. It also asserted that the full control of their natural resources was an essential prerequisite for an effective programme of economic cooperation among developing countries. In terms of the specific measures of cooperation among developing countries, the Action Programme identified

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three broad areas, namely, trade, transport and industry; money and finance; and science and technology. In the area of trade, transport and industry, the Non-Aligned countries were urged to take steps to: (a)

(b) (c)

establish or strengthen producers’ associations and joint marketing arrangements in primary commodities such as copper, bauxite, tea, jute, petroleum, oil seeds, cocoa, bananas, and other commodities that might be identified from time to time; to grant trade preferences among themselves; strengthen transportation links as a necessary complement to trade expansion; and establish joint ventures as well as integrated regional industries within economic groupings or in geographically contiguous countries.

In money and finance, the Non-Aligned countries were urged to settle payments among themselves in their own currencies and to establish suitable clearing arrangements for this purpose. Moreover, in order to promote closer cooperation in this field they were urged to establish export credit guarantee institutions and, in the case of integration groupings, to adopt suitable exchange control policies. Finally, in terms of science and technology, the Non-Aligned countries were encouraged to exchange information on new achievements in the field of technology and to establish joint research institutes geared to the special problems of the developing countries. They were also urged to cooperate in developing new uses for primary products threatened by competition from synthetic substitutes and to adapt technology to their particular production structure and natural resource endowments. As part of the Action Programme, the Conference also decided to establish a Committee of Experts to formulate appropriate measures to ensure that foreign private investment served national development objectives. The Committee was asked to take account of the need for meaningful participation of the developing countries in strategic economic areas, particularly in terms of natural resources; common foreign investment policies; the approximation of fiscal and other incentives; and the promotion of joint investment schemes. Regarding the institutional arrangements for promoting ECDC, the Conference decided that the Non-Aligned countries should establish appropriate machinery to implement the decisions contained in the Action Programme. It was agreed that the Ministers of the Non-Aligned countries should meet every two years to ensure appropriate follow-up in the

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implementation of the programme. In addition, it was recommended that four member-countries selected on a regional basis should be made responsible for specific follow-up action in respect of the three sectors identified under the Action Programme as well the broad area of international cooperation for development.2 Finally, it was agreed that the Non-Aligned countries should utilise the UN system as well as regional development banks, universities and other suitable institutions in the various member countries in seeking to achieve the objectives of the Action Programme. In this respect, the Georgetown Conference succeeded in going beyond the Lusaka Summit in identifying specific institutional arrangements for the implementation of the programmes on ECDC. Building upon the initiatives taken at Lusaka and Georgetown, the Fourth Non-Aligned Summit held in Algiers in September 1973 adopted an expanded Action Programme of Economic Cooperation which emphasised the need for an intensification of efforts to expand trade among the developing countries through, among other things, the strengthening of monetary and financial cooperation and the grant of credits designed to stimulate exports. The Summit also reiterated the need for developing countries to set up and strengthen producers’ associations for their principal products in order to halt the deterioration in their terms of trade. Moreover, it recommended that the developing countries should convene a conference on primary products in order to adopt an appropriate strategy for restructuring international trade and improving their bargaining position with the developed countries. This recommendation formed the basis for the subsequent Conference on Raw Materials which was held in Dakar in January 1975. The Summit also reviewed the work carried out by the coordinators in respect of the four sectors of the Action Programme adopted in Georgetown and agreed to extend their mandate until the next summit. In addition, it agreed that the studies already carried out as well as others to be carried out in the future, should form the basis for the elaboration of a comprehensive programme of interregional cooperation. As the Georgetown Conference had done, the Summit agreed to continue to seek the support of the UN system in carrying out the Programme. The Algiers Summit also agreed to the proposal for the creation of a Development and Solidarity Fund with the aim of utilising surplus funds for financing urgent projects and to provide long-term assistance to membercountries of the movement. To this end, the Summit decided to appoint a working group to prepare the particulars of the Fund for submission to a subsequent conference of Foreign Ministers of Non-Aligned countries.

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After reviewing the report of the Committee of Experts which was appointed at the Georgetown Conference to draw up guidelines on foreign investment, the Summit agreed that such investment should be subject to centralised government control and that the developing countries should seek to establish common norms for transnational enterprises. In order to pursue this objective more effectively, it decided to set up an information centre on transnational corporations for the purpose of exchanging experience among Non-Aligned countries. As part of the Action Programme, the Summit called for increased cooperation among developing countries in the field of mass communication in order to enable these countries to communicate more freely and directly with one another. This decision formed the basis for the Non-Aligned News Agencies Pool which was subsequently established. The framework for economic cooperation established at Lusaka (1970), Georgetown (1972) and Algiers (1973) was progressively elaborated during subsequent conferences of the Non-Aligned countries meeting at the level of the Coordinating Bureau, the Foreign Ministers and the Summit itself. For example, the meeting of the Coordinating Bureau held in Algiers in March 1974 recommended that the coordinating countries for the various sectors of the Action Programme should meet periodically for the purpose of exchanging information regarding their experience in the implementation of the Programme and thus laid the basis for the subsequent institutionalisation of such a meeting. During the time of the negotiations on the NIEO, meetings were held in Belgrade (1974), Georgetown (1975), and Havana, (1976 and 1982). At its meeting held in Havana (1976), the Bureau recommended the establishment of a Council of Producers Associations and also identified new areas of cooperation, namely, food production, health and the application of nuclear energy for peaceful purposes. The Non-Aligned Foreign Ministers Conference held in Lima in August 1975 adopted a number of important decisions in respect of the Action Programme. Among other things, the Conference approved the text of the Solidarity Fund for Economic and Social Development of the Non-Aligned Countries. It decided that a group of experts should meet to review the draft statute relating to the proposed Information Centre on Transnational Corporations and also agreed to establish a Committee of Experts to recommend a programme of cooperation among Non-Aligned countries in science and technology, with special reference to the need to establish a Centre on Science and Technology for promoting cooperation in this field. Finally, the Conference decided to establish a special fund for the financing of buffer stocks of raw materials and primary products exported by the developing

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countries and, therefore, requested the Intergovernmental Committee on Raw Materials, that had been established at a previous Conference, to reconstitute itself as a Preparatory Committee of Experts to draw up the final agreement creating the Fund. The Colombo Summit held in August 1976 not only expanded the scope of the Action Programme, but also marked a new departure in the evolution of the Programme. The Conference recommended the establishment of multinational marketing enterprises to facilitate the expansion of trade among developing countries. Similarly, it advocated the establishment of multinational production enterprises based on natural resources complementarity among the developing countries as a means of expanding their industrial capacity. This latter decision was significant in that it sought to focus attention on the production dimension of economic cooperation which, as will be argued later, represents a critical aspect of the strategy of ECDC. In addition, the Conference agreed to convene a group of experts to examine the feasibility of establishing a Bank of the Developing Countries that would undertake both commercial and merchant banking operations. This was also an important initiative since such a bank could play a pivotal role in the financing of ECDC activities. Finally, the Summit identified new areas of cooperation, including telecommunications, insurance, education, human resources development and tourism and also expanded the number of coordinating countries. Thus, between 1972, at the time of the Georgetown Foreign Ministers’ Conference, when there were only four areas under the Action Programme and seven coordinating countries, the number of areas of cooperation had grown, by the end of the Colombo Summit in 1976, to fifteen and the number of coordinators to twenty-five. In terms of the institutional arrangements for the coordination of the Action Programme, the Summit decided that the Programme should be reviewed annually at a meeting of the Coordinating Countries which was in turn required to report to the Conference of Foreign Ministers of the Movement.

From Declaration to Implementation Most of the essential elements of the Action Programme that had been elaborated over the years were endorsed by the Sixth Non-Aligned Summit in Havana in August 1979. However, in view of the gap between ‘declaration’ and ‘actual implementation’ of the Action Programme, the Summit decided that the implementation of the Programme should be reviewed by both the Coordinating Bureau and meetings of Foreign Ministers of the Group. It was also agreed that the Coordinating Bureau would meet at the expert level with experts from the Coordinating Countries in order to review the implementation

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of specific sectors of the Programme and make appropriate recommendations to the meeting of Foreign Ministers. The Havana Summit, therefore succeeded in introducing a further innovation in the procedures for reviewing the Action Programme. By the time of the New Delhi Summit in March 1983, the promotion of ECDC had come to be recognised as an urgent need, in view of the failure to resume global negotiations between the developed and the developing countries that had been called for at the Havana Summit. Consequently, the Summit paid particular attention to the elaboration of the Action Programme for Economic Cooperation Among Developing Countries which was seen as offering considerable potential for promoting the development of these countries and for effecting fundamental change in the prevailing structure of international economic relations. In specific terms, the Summit called, among other things, for the speedy conclusion of the negotiations on the Global System of Trade Preferences (GSTP) and stressed the need for increased financial cooperation among the developing countries. In addition, it advocated the early finalisation of the proposed ‘Project Development Mechanism for Techno-Economic Cooperation’ as a means of accelerating the preparation and implementation of multinational projects. Finally, the Conference urged greater harmonisation and coordination between the ECDC programmes of the Non-Aligned movement and the Group of 77 and, accordingly agreed, that the question should be pursed by the Coordinating Bureau of the Movement and the Group of 77 in New York. Against the background of these several decisions, perhaps the most conspicuous example of the efforts of the Non-Aligned countries to promote economic cooperation at an operational level was the APEC-TTI3 programme which was implemented by Guyana in its capacity as coordinator of the Trade, Transport and Industry Sector of the Non-Aligned Action Programme.4 In carrying its mandate, Guyana sought and obtained financial support from the Governments of Sweden and Netherlands, which contributed approximately $1 million in the form of a trust fund administered by the then UN Department of Technical Cooperation for Development (DTCD). On this basis, the Guyana Government established the APEC-TTI Secretariat in Georgetown which was staffed by a number of UN experts in the field of trade, transport and industry, appointed by the Department of Technical Cooperation for Development in consultation with the Government. The establishment of the Secretariat in Georgetown expressed a serious commitment to the principle of changing the prevailing pattern of international economic relations from a developing country setting, since it was proposed

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by the UN that the Secretariat should be located in New York or in Geneva which had the necessary facilities for carrying out research. The Guyana Government was emphatic, however, that it could not, as a matter of principle, agree to the location in the developed world of a Secretariat that was designed to promote economic cooperation among the developing countries. As such, the decision regarding the location of the secretariat represented an important symbolic gesture. Significant work was done by the Secretariat in the area of producers associations, trade and, to a lesser extent, transport and industry. In the area of producers associations, the Secretariat provided advice to existing associations and also assisted in the formation of new associations. However, the main work of the Secretariat in this area formed the basis for the drafting of the statutes for a Council of Producers Associations which was endorsed by an expert group meeting in Geneva in 1977 and subsequently modified by a meeting of representatives form various producers associations, including OPEC and the then International Bauxite Association (IBA), held in Georgetown later in the same year. In addition, with the financial support of UNDP and the close collaboration of DTCD (now integrated into the Department of Economic and Social Affairs (DESA)), UNCTAD, and UNIDO, the TTI sector of the Action Programme was able to implement an important project dealing with economic and technical cooperation among developing countries in the field of pharmaceuticals. The project made a number of policy recommendations5 for adoption by the developing countries in the field of pharmaceuticals, including the adoption of a ‘basic drugs’ list, the use of generic names and, more importantly, the establishment of joint production and research facilities, including the establishment of so-called Cooperative Pharmaceutical Production and Technology Centres (COPPTECs). These recommendations were endorsed by the Sixth Non-Aligned Summit held in Havana in August 1979. Studies were also carried out in the areas of transportation and industry. But these were essentially preliminary in nature. A study on the promotion of cooperation among state trading organisations (STOs) which was carried out with the support of the UN Economic and Social Commission for Asia and the Pacific (ESCAP), formed an important input into the work of the UNCTAD secretariat in this field in the specific context of the activities of the Committee on ECDC. Unfortunately, the failure to mobilise additional resources in support of the work of the APEC-TTI Secretariat resulted in the termination of its activities. It is ironic that, despite the generous financial support provided by the Governments of Sweden and the Netherlands and by the UN system to promote

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activities in the field of ECDC, the developing countries themselves were unable to provide the necessary financial support to ensure the continuation of the activities under the project, in spite of the existence, at the time, of significant surpluses in some developing countries. As is evident from the above, the early formulation and elaboration of programmes of ECDC was essentially the work of the Non-Aligned Movement and certainly reflected its progressive orientation on international economic issues. However, from the mid-1970, the wider Group of 77 began to actively embrace the concept and to elaborate concrete programmes of action to promote economic cooperation among the developing countries.

The Group of 77 and ECDC The first major initiative of the Group in this regard was the adoption of a comprehensive resolution on ECDC at its Third Ministerial Meeting held in Manila in February 1976. The resolution which was inspired by the perception that the North-South Dialogue had failed to provide solutions to the problem of poverty and economic under-development, marked a new departure in the conception of ECDC in many respects. In its overall thrust, it called for the forging of new links in trade, transport, money and finance, agriculture and science and technology. In particular, it called for an examination of the feasibility of tariff preferences among developing countries and the conclusion of direct trade agreements between the developing countries embodying longterm purchase commitments. In addition, it urged an investigation into the possibility of establishing and strengthening payment arrangements among developing countries. Specific measures were also advocated to stimulate the flow of capital and technology among developing countries. Of greatest significance, however, was the advocacy of industrial integration agreements at the sub-regional and regional levels and the conclusion of wider industrial complementarity agreements at the interregional level in order to increase trade in manufactures and semi-manufactures among developing countries. This was an important initiative since it sought to move the theory of ECDC beyond its previous emphasis on trade expansion towards cooperation in production and thus expanded the conceptual horizons of the programme of cooperation among developing countries. As was previously noted, this concept found its way into the decisions of the Fifth Non-Aligned Summit held in Colombo in August 1976. Finally, the resolution provided for the convening in Mexico City in September 1976 of an intergovernmental working group of interested developing countries to prepare the details of an updated programme of ECDC.

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In keeping with this decision, during UNCTAD IV in Nairobi in May 1976, the Group of 77 decided to convene in Geneva in July 1976 a meeting of governmental experts to prepare for the Mexico meeting. It was also decided that the Mexico meeting itself should be upgraded and that the developing countries should endeavour to ensure representation at the highest possible level. This reflected a conscious policy on the part of Mexico to expand its role in the promotion of ECDC in the wake of its previous successful sponsorship of the Charter of Economic Rights and Duties of States in 1974, as well as a strategy to put the Group of 77 at the centre of the programme of ECDC, bearing in mind that the Non-Aligned Movement had played the leading role in the early formulation of the programme.

The Mexico Conference Updates ECDC Viewed in the overall context of the evolution of ECDC, the Mexico Conference was important in two respects. Firstly, it was the first meeting of the Group of 77 devoted exclusively to ECDC. Secondly, it elaborated a number of specific elements in the programme previously sketched in Manila that became major pillars of the programme of ECDC. For example, the Conference called for the establishment of a global system of trade preferences among developing countries (GSTP) and requested the UNCTAD Secretariat to carry out a detailed study on the various aspects of the system. The UNCTAD Secretariat, in cooperation with the regional economic commissions, was also requested to carry out studies aimed at the adoption of joint procurement policies by developing countries; the establishment of trade information and joint market research systems; and the promotion of cooperation among state trading organisations. In the field of commodities and raw materials, the Conference emphasised the need to strengthen producers’ associations and also called for the establishment of a Council of Producers’ Associations. Similarly, the UNCTAD Secretariat, together with the regional economic commissions, was requested to undertake studies leading to the establishment of multinational marketing enterprises as well as commodity exchanges. In seeking to carry forward the initiatives taken at Manila in the area of production, the Conference called for development of multinational projects in both industry and agriculture involving production specialisation at the sub-regional, regional and interregional levels. The importance of multinational transportation facilities as well as the expansion of telecommunications was also emphasised, as was the need for increased cooperation in insurance and tourism.

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In the important area of monetary and financial cooperation, the Conference urged the strengthening of existing clearing and payment arrangements as well as the promotion of cooperation among central banks. In addition, it agreed that groups of experts should carry out studies on the possibility of establishing a Developing Countries Payments Union (DPU) and also on the feasibility of establishing and operating a Bank of the Developing Countries which would carry out both commercial and merchant banking functions. This latter decision was a follow-up to the initiative taken at the Colombo Summit which also called for studies on the establishment of such a Bank. A number of specific measures for the promotion of increased cooperation among developing countries in the field of science and technology were also identified, including the establishment of sub-regional, regional, and interregional technology centres, such as the proposed Regional Cooperation Pharmaceutical Production and Technology Centres (COPPTECs) which, as mentioned previously, were being promoted under the Georgetown-based UNAPEC-TTI Programme. Similarly, detailed studies were also to be undertaken by the Group of 77 regarding the establishment of technology information and data banks. In conjunction with these efforts, emphasis was also placed on increased cooperation in the field of education, human resources development, research and energy development. In terms of the arrangements for overseeing the programme of ECDC, the Conference decided that the ministerial meetings of the Group 77 should be vested with the overall political responsibility for the review and evaluation of the various measures envisaged under the programme. To this end, it was also agreed that the ministerial meeting of the Group that was to be held immediately before the ministerial session of the Trade and Development Board should decide on the frequency and level of future meetings to be convened for the purpose of reviewing the programme of ECDC. This decision was in the nature of a compromise which, in effect, postponed a decision on the establishment of more detailed arrangements within the Group of 77 for the review of ECDC. The host government, Mexico, was eager to ensure the establishment of a comprehensive review mechanism within the Group of 77 which, because of its broad membership, it felt was a legitimate forum for this purpose. However, the Non-Aligned countries participating in the meeting were reluctant to agree to this proposal, based on their concern that it would detract from the responsibilities of the Non-Aligned Movement which had pioneered ECDC and which had itself set up review mechanisms such as the meeting of coordinators of the various sectors of the Action Programme, the Coordinating Bureau of the Movement, the Foreign Ministers’

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Conference and the Non-Aligned Summit itself. In fact, it was these same considerations which led the Conference to reject the proposal put forward by Pakistan (which at the time was not yet a member of the Non-Aligned Movement), for the convening of a Third World Summit, since it was felt that such a meeting would compete with the already established Non-Aligned Summit. It was significant that while the Conference decided to vest the overall political review of the programme in the Group of 77 itself, it relied heavily on the organisations of the UN system, particularly the UNCTAD Secretariat and the regional economic commissions, to carry out the technical work required for the implementation of the various measures identified. This was a conspicuous feature of the Mexico Conference.

Medium Term Action Plan for Global Priorities on ECDC The measures identified at the Mexico Conference were further expanded and refined under the Arusha Programme for Collective Self-Reliance adopted at the Fourth Ministerial Meeting of the Group of 77 held in February 1979. The meeting outlined the elements of a medium-term Action Plan for Global Priorities on ECDC which was to be reviewed regularly at future ministerial meetings of the Group of 77 and at the level of senior officials in the period between the ministerial meetings. The Plan which followed closely the measures identified previously in Mexico, envisaged, among other things, (a) (b) (c) (d) (e) (f) (g) (h) (i)

specific follow-up action relating to the establishment of the proposed global system of trade preferences among developing countries (GSTP); increased cooperation among state trading organisations (STOs); the establishment of multinational marketing enterprises (MMEs); increased cooperation in the transfer of technology; the strengthening of sub-regional, regional and interregional insurance schemes; the promotion of multilateral payments and credit arrangements; the establishment of the proposed Bank of the Developing Countries arrangements designed to facilitate access by developing countries to the capital markets of other developing countries and, arrangements designed to promote an increase in the exchange of information on monetary and financial matters.

In seeking to build upon the initiatives taken in Manila and Mexico regarding cooperation in production among developing countries, the Arusha

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meeting called for the formulation of policy guidelines for the selection of multi-country production projects. In this connection, the UNCTAD Secretariat was requested to formulate a clearer definition of the concept of multinational production enterprises among developing countries and to advance proposals designed to promote the establishment of such enterprises. It was also proposed that the establishment of multinational production enterprises should be based on projects which, among other things, involved significant input and output linkages with new or existing facilities; required markets larger than any single country could provide for economic and efficient production; which offered possibilities for the optimal exploitation of natural resources; and which promoted the processing of primary commodities and the development of industries in sectors with a long-term growth potential. Regional development banks and private development financing institutions were, therefore, called upon to provide the financing required for the feasibility studies in respect of the projects selected on this basis. In doing so, the Arusha meeting underlined its growing appreciation of the importance of cooperation among the developing countries in industrial production as a basis for promoting their accelerated development. It thus reaffirmed what became a central theoretical element in the strategy of ECDC, even though not much progress was made in the actual implementation of concrete schemes of cooperation in this area. As was the case at the 1976 Mexico Conference, the Arusha Programme also relied heavily upon the UN system to provide the necessary technical support to implement the various measures identified. For this reason, the Group of 77 called for the strengthening of UNCTAD to enable it to provide more effective support to programmes of ECDC. In terms of the institutional arrangements for reviewing the programme, the Arusha meeting called for the convening of periodic ministerial meetings for the purpose of determining priority areas as well as the establishment of Action Committees comprising countries interested in particular areas of cooperation. This latter arrangement was an attempt to imitate the model utilised by the Latin American Economic System (SELA), in the implementation of its programmes. In the wake of the decisions of the Arusha Conference, follow-up meetings of the Group of 77 that were held in New York in September 1976, March 1980 and September 1980 reaffirmed support for the programme of ECDC, which was increasingly being seen as an integral part of the effort to create a new structure of international economic relations. However, the most significant conference held by the Group of 77 following the Arusha meeting was the High-Level Conference on ECDC in Caracas in May 1981 which adopted the so-called Caracas Programme of Action.

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The Caracas Programme of Action on ECDC The Caracas Programme sought to bring together, within a comprehensive framework, the various elements embodied in previous programmes of economic cooperation adopted by the Group of 77. Accordingly, it identified specific measures designed to increase cooperation among developing countries in the broad areas of trade, technology, food and agriculture, energy, raw materials, finance and industrialisation. A major recommendation of the Conference was that a group of experts should be established to examine the various proposals made by the Non-Aligned Movement and the Group of 77 in the area of financial cooperation and to recommend concrete measures by the end of 1981 to promote such cooperation, including, inter alia, the early entry into force of the Non-Aligned Solidarity Fund and the establishment of a Bank of the Developing Countries. In the field of industrialisation, special emphasis was placed on the establishment of joint industrial projects involving the transfer of technology and the setting up of joint ventures based on resource complementarity in priority sectors such as raw materials, fisheries, agriculture, agro-industries, mining, petrochemicals, fertilisers, pharmaceuticals, intermediate and capital goods, textiles, building materials and power generation. In addition, the Conference reaffirmed the importance of TCDC as an instrument for the promotion of ECDC.

Institutional Arrangements The Caracas meeting was also important in that it established a number of institutional arrangements for coordinating and monitoring the implementation of the Programme of Action. For example, the meeting decided to establish an Intergovernmental Follow-up and Coordination Committee (IFCC) made up of senior officials in order to periodically review and, where necessary, give impetus to the implementation of activities in the field of ECDC. It was agreed that the Committee would meet once a year and would make use, inter alia, of information provided by the Chairman of the Group of 77 and the Regional Coordinators of the Group in the various UN centres. In addition, it was decided that meetings of high-level officials concerned with specific sectors of cooperation under the Caracas Programme should be held every two years in order to review progress in such sectors and recommend appropriate action to the ministers of the Group of 77 through the Intergovernmental Follow-up and Coordination Committee. At the broad political level, it was agreed that the annual ministerial meetings of the Group of 77, normally held in New York at the beginning of

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each regular session of the UN General Assembly, would concentrate, preferably every second year, on a thorough review and appraisal of activities carried out under the programme of ECDC and provide the necessary guidance and also take decisions with respect to policy issues and operational matters designed to strengthen ECDC. At the operational level, the Conference identified a number of specific mechanisms and modalities for carrying out the programme, namely, expert groups and other similar meetings; meetings of heads of national agencies; action committees and other similar instruments; and national research and training centres of multinational scope. In terms of activities aimed at the coordination of ECDC, it was decided that the Group of 77 in New York, acting in close collaboration and consultation with the representatives of the developing country hosting the next meeting of the Follow-up and Coordination Committee and with other chapters of the Group, would assume responsibility for functional questions such as the scheduling and convening of meetings and the elaboration of their agenda, the collection and dissemination of information and the reproduction and distribution of documents. It was also agreed that a ‘core’ of assistants should be appointed to assist the Chairman in the promotion of ECDC. The ‘core’ of assistants was to be drawn from the three geographical regions of the Group, together with a representative from the country where the last meeting of the Follow-up Coordination Committee was held and from the country hosting the next meeting. The ‘core’ of assistants who were, in effect, drawn largely from the permanent missions in New York and appointed in consultation with the Chairman of the Group of 77, began functioning in 1982 from offices located on the thirty-ninth floor of the UN Secretariat in New York and proved quite effective in providing support for the necessary follow-up in respect of ECDC activities. The core of assistants was instrumental in enabling the Group of 77 to publish a regular bulletin which provided information on ECDC matters to member countries of the Group of 77. For all practical purposes however, the practice of appointing a core of assistants has since been replaced by reliance on a small staff which assists the Chairman of the Group in carrying out his responsibilities. In the critical area of the financing of Support Activities for ECDC, the Caracas Conference decided that the costs involved in convening expert groups and other meetings related to ECDC should be borne by the countries hosting such meetings where these costs could not be met through an international organisation. It was also agreed that the Group of 77 in New York would authorise its Chairman to establish in his name a ‘Group of 77 Account for ECDC’ to finance the collection, printing and distribution of documents and information regarding meetings of expert groups. The minimum contribution

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for this purpose was fixed at US$1,000, although special additional contributions were invited.6 Because of its comprehensive scope and its elaboration of specific institutional arrangements and procedures for implementation and follow-up, the Caracas Programme of Action represented a significant expression of ECDC articulated by the Group of 77 in the context of the philosophy of collective self-reliance. For this reason, it provided a basic framework for the elaboration of programmes of ECDC, although the Non-Aligned Group continued to maintain the separate identity of its own action programme. It should be noted however, that the Declaration and Programme of Action adopted at the first Summit of the Group of 77 held in Havana in April 2000 may be said to have updated, although not entirely superseded, the Caracas Programme of Action.

Approaches of the NAM and the G77 to ECDC It is interesting to compare the approaches of the Non-Aligned Movement and the Group of 77 to the promotion of ECDC. Although the content of both programmes became almost identical, there are certain differences in the organisational arrangements adopted by the two Groups for the implementation and monitoring of ECDC activities. At the political level, the former relied on meetings of the Coordinating Bureau, the Foreign Ministers’ Conference and the Summit itself to provide broad policy guidance regarding the content and priorities of the programme, while the appointment of coordinators for the various sectors of the programme constituted the main instrument of implementation at the technical level. Although the mechanisms at the political level proved effective in elaborating the broad elements of the programme, implementation at the technical level was somewhat problematic mainly because of the lack of specific financial provisions to carry out the programme. Moreover, although meetings of the coordinators of the various sectors of the programme were held from time to time, the proliferation of sectors under the programme and the increase in the number of coordinators appointed for each sector made it difficult to ensure a genuine coordination of effort. There was also a tendency for the programme to become declaratory in nature rather that genuinely operational. In addition, the fact that the NonAligned Movement dealt with economic as well as political issues detracted, to some extent, from a concentrated focus on the action programme, notwithstanding the fact that the movement played an important role in promoting the concept of ECDC. On the other hand, the Group of 77, had an exclusive focus on economic issues and opted for broad policy coordination through the annual meetings of the Group held in New York at the beginning of the regular sessions of the UN

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General Assembly and at the ministerial meetings held every four years in preparation for the UNCTAD conferences. In the future, the Summit meetings of the Group, the first of which, as mentioned earlier, was held in Havana in April 2000, is likely to play an important role in giving direction to the programme. In terms of modalities of implementation, the Group utilised action committees, advisory panels, expert groups and meetings of heads of national agencies, instead of coordinators as in the case of the Non-Aligned Movement, even though the functions of the action committees tended to approximate those of the coordinators. One clear advantage with the Group of 77 arrangements was the specific provision for the financing of meetings, the absence of which, as mentioned earlier, presented an obstacle to the effective implementation of the Non-Aligned programme.

The Role of the UN Apart from their own internal efforts within the Non-Aligned Movement and the Group of 77, the developing countries sought the assistance of the international community, and in particular, the UN system, to promote the objectives of ECDC. In pursuance of this goal, beginning in 1973, the developing countries promoted, during the annual sessions of the UN General Assembly, resolutions7 on ECDC which, among other things, generally called upon the international community to provide such assistance. The resolutions also requested the UN Secretary General to include appropriate support measures in the programmes of the UN system and to report on progress made in the implementation of such measures. In addition, on the initiative of the developing countries, it was decided at UNCTAD IV, 8 held in Nairobi in May 1976, to request the Trade and Development Board to establish an open-ended Committee on ECDC to consider support measures designed to strengthen cooperation among developing countries. In Resolution 92 (IV), the Conference also urged the developed countries and international organisations to provide specific forms of support for the programme of ECDC including, in the case of the developed countries, the allocation of funds in their development assistance programmes for the promotion of multinational ventures among developing countries. The Committee on ECDC,9 which held its first session in Geneva from May 2–9, 1977, established, a programme of work within UNCTAD on ECDC. The resolution called upon the Secretary-General of UNCTAD to give special priority to the studies relating to the global scheme of trade preferences among developing countries; cooperation among state trading organisations; multinational marketing enterprises; as well as the intensification of ongoing work relating, among other things, to the strengthening of integration

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arrangements; the establishment of export credit and import credit guarantee schemes; the transfer of technology and the establishment of multinational production enterprises. As will be seen, these priorities were heavily influenced by the decisions of the Mexico Conference on ECDC held during the previous year and represented, in effect an attempt to orient the ECDC work programme of the UNCTAD Secretariat towards the implementation of the priorities determined by the developing countries at that Conference. The work of the Committee was, however, complicated by the fact that the developed countries were initially reluctant to confine their attention to ‘support measures’ and insisted instead on effective participation in the discussion of the substantive aspects of ECDC which the developing countries asserted fell within their exclusive competence. Moreover, although a number of General Assembly resolutions, which were adopted by consensus, had urged the Secretary-General of UNCTAD to provide support for meetings of the developing countries on ECDC, the developed countries were reluctant to sanction, in the context of the work programme of UNCTAD, the convening of meetings limited to the participation of the developing countries on the ground that such a practice would contravene the principle of universality, based on the right of member states to participate in all aspects of the work of the United Nations. This issue was to lead to prolonged stalemate between the developed and developing countries within UNCTAD. Following the failure to resolve the question through negotiations, the Trade and Development Board approved in October 1982, by a vote of 63 in favour, 22 against and nine abstentions, a framework of support measures which authorised the developing countries to seek UNCTAD support for the servicing of ECDC meetings.10

Oil Prices, OPEC and Non-Oil Producing Developing Countries Despite the progressive elaboration of programmes of ECDC during the period covered by study (1974–1984), a number of complications arose in respect of the implementation of the programme which are worthy of note. Beginning in the 1970s, the non-oil-producing developing countries insisted that there was a pressing need to deal, in the short term, with the negative impact of increased oil prices on their economies which had created a major problem since 1973 and which had been aggravated by the impact of the increased prices of manufactured products imported from the developed countries. In response to the problem of increased oil prices, the OPEC countries had attempted to provide assistance to alleviate the economic burden borne by the

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non-oil-producing countries in the context of the persistence of what was perceived to be an outdated structure of international economic relations which served to inhibit their development potential. The volume of total aid disbursements, both concessional and non-concessional, from OPEC countries to other developing countries between 1973 and 1980, amounted to US$2.1 billion in 1973, $6.2 billion in 1975, $7.3 billion in 1979 and $9.1 billion in 1980 which accounted for 2.25 per cent, 2.92 per cent, 1.73 per cent and an estimated 1.7 per cent, respectively, of the combined GNP of these countries. In 1981, OPEC aid amounted to US$7.7 billion compared with $25.6 billion for the DAC countries and $2.1 billion for the countries then belonging to the Council for Mutual Economic Assistance (CMEA). These figures represented an estimated 1.4 per cent, 0.35 per cent and 0.13 per cent, respectively, of the GNP of these three sets of countries.11 Some of the more important mechanisms established by the OPEC countries for the distribution of aid were the OPEC Fund (formerly the OPEC Special Fund), which commenced operations in August 1976 and other funds of more limited scope such as the Kuwait Fund for Arab Economic Development, the Saudi Arabian Fund for Development, the Abu Dhabi Fund, the Arab Fund for Economic and Social Development, the Islamic Development Bank and the Arab Bank for Economic Development in Africa (BADEA).12 The OPEC countries also contributed to the IMF Oil Facility and the Supplementary Financing Facility ( the ‘Witteveen Facility’ ). In addition, they participated in the purchase of World Bank bonds. Other oil-producing countries such as Venezuela and Mexico (not a member of OPEC) provided assistance on a more limited scale to the countries of Central America and the Caribbean under the San José Agreement. Although not a member of OPEC, Trinidad and Tobago also provided much-needed assistance to the Caribbean countries under the terms of its Oil Facility. However, the geographical spread of OPEC aid was rather limited. In particular, the aid provided by the Arab members of OPEC, which accounted for the bulk of the total aid provided by the Organisation, focused largely on the needs of other Arab and Islamic countries, especially on the so-called ‘confrontation states’, such as Egypt, Syria and Jordan. It is estimated that these three countries, together with Gaza and the West Bank, received over half of the total disbursements during the period 1971 to 1981, while Islamic countries accounted for over 90 per cent of such aid during the same period.13 For this reason, the aid provided by OPEC was insufficient to offset the increased cost of oil imports to the developing countries caused by the rise in oil prices. It was recognised almost from the very beginning that the use of the oil weapon to increase the revenue earnings of the oil-producing countries and to

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force structural change in the international economic system would create special difficulties for the non-oil-producing countries. Many of the latter countries felt, therefore, that, in keeping with the principle of mutual assistance and solidarity, more direct measures should be adopted to alleviate the impact of increased oil prices on their economies. In response to these concerns, the Coordinating Bureau of the Non-Aligned Countries, which met in Algiers in March 1974, while welcoming the action by the OPEC countries in securing increased prices for their oil exports, acknowledged the need for cooperation among the developing countries aimed at devising urgent measures to enable the non-oil-producing countries to cope with the immediate problems resulting from the legitimate action of the oilproducing countries. The Bureau, therefore, recommended the setting up of a Working Group comprising Guyana, Liberia, Nepal and Sri Lanka to carry out consultations with the Non-Aligned countries that were members of OPEC aimed at resolving the difficulties facing certain Non-Aligned countries. In keeping with this decision, the so-called ‘Group of Four’ presented specific proposals to the OPEC Ministerial Meeting held in Quito, Ecuador, in June 1974, but no direct action was taken on these proposals. Similarly, the UN Special Fund which was established on the initiative of the developing countries as part of the Special Programme adopted during the Sixth Special Session in 1974 made specific provision for those developing countries which were affected by the economic dislocation which occurred in the wake of the OPEC action in increasing oil prices, and which was aggravated by the significant increase in the price of manufactured goods and fertilisers supplied by the developed countries. In pursuance of the decision of the Sixth Special Session, in 1974, the Twenty-Ninth Session of the UN General Assembly decided that the Special Fund would operate as an organ of the Assembly and established a Board of Governors to assume responsibility for its management. Following a pledging conference held in 1976, the Fund received contributions from Venezuela (US$20 million) and Norway (US$11 million). These funds were used to provide emergency assistance to a number of most seriously affected (MSA) countries, the majority of which were located in Africa. However, the Fund failed to attract a sufficient level of resources to sustain a programme at the level envisaged by the General Assembly. After heated debate in the Second Committee during the Thirty-Second Session, it was agreed that Venezuela and Norway should be allowed to transfer their contributions from the Special Fund to newly-established International Fund for Agricultural Development (IFAD). The majority of developing countries abstained in the voting on the proposal, although the OPEC countries and

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India, which strongly supported IFAD, voted in favour the transfer of the resources. The General Assembly subsequently decided during its Thirty-Third Session to suspend the activities of the Special Fund and to assume the functions of its Board of Governors. Thus, not only did the Special Fund fail to fulfil its immediate purpose of providing emergency assistance on any substantial scale, but because of this failure its potential to become an ‘alternative channel for normal development assistance’, as had been proposed by some delegations during the Sixth Special Session, was not realised. Many of the non-oil-producing countries, the majority of which fell in the MSA category, saw this failure as a betrayal of their cause because of the conspicuous lack of support on any substantial scale, not only from the developed countries but from the OPEC countries (with the exception of Venezuela), which they felt were in a position to support the Fund as a demonstration of their solidarity with the non-oil-producing developing countries. In fact, not only did these countries fail to provide financial support to the Fund, but strongly supported the transfer to IFAD of the contributions provided by Venezuela and Norway. In fairness to the OPEC countries, it may be said that the failure of OPEC to support the UN Special Fund derived in part from their preference to support their own aid institutions, such as the OPEC Fund which was established in 1976.14 Throughout the 1970s, it proved extremely difficult to get the OPEC countries to agree to discuss energy as a separate subject, even at conferences of the developing countries, much less to adopt specific proposals designed to alleviate the impact of increased oil prices. For example, it proved impossible for the Non-Aligned Foreign Ministers to arrive at a consensus text at their Belgrade meeting in July 1978 and, consequently, the reference to energy contained in the draft economic declaration prepared by the host government, Yugoslavia, had to be deleted from the final text. This forced consensus not to discuss energy provoked considerable controversy during UNCTAD V in Manila in June 1976 when a number of Central American countries sought to include energy in the agenda of the Conference and thus threatened the traditional unity and solidarity of the developing countries in the context of an open forum involving the participation of both developed and developing countries.

Support Schemes for Non-Oil Producing Developing Countries The events in Manila provided an opportunity for the non-oil-producing developing countries to force a discussion during the subsequent meeting of the Coordinating Bureau of the Non-Aligned Movement held in Colombo, Sri

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Lanka, in June 1979 in an effort to find a solution to the problem satisfactory to all developing countries and thus to avoid a recurrence of the Manila experience. As was noted in the previous chapter, three separate initiatives emerged during the Colombo meeting. The first initiative came from Jamaica, which sought to approach the discussion on energy frontally by arguing that the energy question was much wider than oil and that it was of critical relevance to the development of the developing countries. As such, it was important for the developing countries to adopt a common position on the subject. Furthermore, the Jamaican delegation pointed to the fact that the public controversy in Manila had underlined the need for the Non-Aligned and other developing countries to avoid a similar display of disunity in future by arriving at a common understanding among themselves on the question of energy. The OPEC members of the Coordinating Bureau were, however, not ready to adopt such a bold approach to the energy question. Consequently, the Jamaican proposal advanced at the meeting was whittled down to such an extent as to make virtually innocuous the reference to energy in the final report of the meeting. Nevertheless, the Jamaican proposal represented an important initiative since it was the first time that the question of energy was discussed at such length among developing countries and, therefore, modified to some extent the virtual veto which the OPEC countries had previously exercised over such discussions. The second initiative at the meeting was the proposal by Iraq for the establishment of an inflation fund to deal with the impact of inflation on the developing countries caused mainly by the policies pursued by the developed countries and, to a lesser extent by the increase in oil prices. While the nonoil-producing countries were sceptical of the efficacy of the Iraqi proposal, the Coordinating Bureau accepted the invitation of the Government of Iraq to host a meeting of government representatives in Baghdad in August 1979 to exchange views and to formulate suitable proposals on the subject. A follow-up meeting on the so-called ‘World Fund’ on inflation held in Baghdad in March 1982 elaborated the possible features of the proposed fund. Among other things, it was proposed that such a fund should provide grants, soft loans and commercial loans to offset the financial burden imposed on the developing countries as a result of the inflation exported by the developed countries and the adjustment in oil prices. Contributions to the proposed fund were to come from four different categories of countries, namely, the OECD countries; the centrally planned states members of the Council for Mutual Economic Assistance (CMEA); oil-exporting countries; as well as other developing countries through the provision of voluntary contributions. It was proposed that the contributions to the fund should equal the total additional

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financial burden on developing countries resulting from increases in the prices of exports to the developing countries. Notwithstanding the merit of the proposed fund in recognising the need to deal with the problems faced by a number of non-oil-producing developing countries, its implementation was problematic in two fundamental respects. Firstly, there were major technical difficulties in establishing the relative proportion of inflation deriving from the developed countries as against that related to the increase in oil prices. Secondly, the scheme was premised on support from the developed countries which were reluctant to accept its premises and therefore placed its viability in considerable doubt. In any event, even if contributions were to be obtained from this source, the scheme would have been placed outside the exclusive control of the developing countries themselves and therefore could not, strictly speaking, be viewed as a mechanism for promoting mutual assistance and solidarity. In reality the proposal reflected a clear attempt to shift responsibility away from the OPEC countries for the adverse economic impact of oil price increases. The third initiative at the Colombo meeting came from Guyana, which sought to approach the question of assistance to the non-oil-producing countries in terms of the strengthening of mutual assistance and solidarity among the developing countries through the identification of suitable mechanisms designed to alleviate the adverse economic impact of increased oil prices on the non oil-producing countries. Following heated debate, the meeting eventually accepted the proposal of the Government of Guyana to convene a meeting in Georgetown on the subject of mutual assistance and solidarity among developing countries in the context of the principle of collective selfreliance. During the meeting15 which was held in Georgetown in August 1979, just before the Sixth Non-Aligned Summit in Havana, Guyana put forward a number a specific proposals designed to alleviate the impact of oil price increases on the non-oil-producing countries and also to lay the basis for the long-term development of these countries. These measures included a Rebate Scheme on Oil Purchases; a Discount Scheme for Oil Purchases; the establishment of a Fund for the Financing of Economic Cooperation Among Developing Countries on a Priority Basis; and a Fund for the Development of Energy Resources in the Developing Countries. Of the various proposals put forward, the Rebate Scheme on Oil Purchases had the potential to provide an almost complete solution to the problem deriving from the impact of increased oil prices on the economies of the nonoil-producing developing countries. The scheme was premised on the grant of a rebate on oil purchases to oil importing developing countries. The allocation

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of rebates was to be made to these countries on the basis of the ratio of each country’s import of oil for domestic use compared to the total imports of all developing countries. The scheme was considered to be superior to a two-tier pricing system, which had been previously proposed, since it avoided the considerable practical difficulties involved in the implementation of such a system. Secondly, it would not have interfered with the pricing policy of the OPEC countries nor would it have affected the returns on their oil exports. Thirdly, it involved no cost to the oil-importing developing countries since the major burden of financing would have devolved upon the oil-importing developed countries which accounted for over 80 per cent of the world’s imports from the OPEC countries. In effect, the scheme involved a tax on the developed countries aimed at offsetting the impact of increased oil prices on the economies of the non-oilproducing countries.16 However, despite exhaustive discussions on these proposals during the Georgetown meeting, the OPEC countries refused to accept any arrangements which, in their opinion, could affect their pricing policy. Consequently, the meeting was only able to recommend that priority should be given to the nonoil-producing developing countries in terms of oil supplies and that efforts should be made by the OPEC countries to provide increased investment in the non-oil-producing developing countries. It should be mentioned that the Guyana, India, Jamaica and Yugoslavia coalition which had sought during the meeting to persuade the OPEC countries to make larger concessions, came apart after India and Yugoslavia, which had a major interest in obtaining priority supplies and increased investment, decided to accept the assurances of the OPEC participants on these points as the most practical that could be expected in the circumstances. Guyana and Jamaica, therefore, had no choice but to join the consensus in support of this compromise. As it turned out, the 1979 Non-Aligned Summit in Havana, at which the question of energy was discussed both informally and formally, was unable to arrive at an agreement on more specific arrangements to alleviate the impact of increased oil prices and, therefore, agreed to endorse the recommendations made by the consultative meeting in Georgetown. The failure of the developing countries to adopt specific measures to directly offset the adverse impact of increased oil prices on the non-oil-producing countries constituted a fatal flaw in the unity and solidarity of the developing countries in their negotiations with the developed countries since it tended to weaken the resolve of the non-oil producing developing countries in carrying out the struggle for the establishment of the New International Economic

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Order. This failure also proved to be a hindrance to the adoption by the developing countries of a longer term strategy of making ECDC an effective instrument for changing the structure of international economic relations. Finally, the discussions which took place at the Georgetown meeting caused the OPEC countries to become suspicious of the concept of mutual assistance and solidarity which they mistakenly saw as a means of extracting greater concessions from them on the energy question rather than as an integral part of the strategy to consolidate the unity of the developing countries in their pursuit of the objectives of ECDC, as it really was intended to be.

Strategy for a Longer Term Programme of ECDC Apart from the immediate short-term need to deal with the impact of increased oil prices on the economies of the non-oil-producing developing countries, it became increasingly evident during the 1980s that there was a need for the developing countries to continue to develop a sound strategic conception for a longer term programme of ECDC, designed to change the pattern of international economic relations. In the early formulation of programmes of ECDC, there was a tendency to emphasise the formation and strengthening of producers’ associations as a central aspect of the strategy of ECDC, largely because of the success of OPEC in increasing oil prices. Indeed, it was argued that in order to deal with their economic problems, the non-oil-producing countries should seek to imitate the example of the OPEC countries in respect of other commodities produced by them in an attempt to increase the value of their raw material exports. But this argument overlooked the fact that no other commodity produced by developing countries had the same strategic importance as oil in the international economy. To illustrate the point, whereas the value to the developing countries of crude oil and natural gas production in 1975 was approximately US$130 billion, the value of the nine major minerals produced by developing countries, namely, bauxite, copper, iron ore, lead, manganese ore, nickel, phosphate rock, tin and zinc ranged from a low of US$0.19 billion for lead to a high of US$6.1 billion for iron ore, which represented 0.14 per cent and 4.7 per cent, respectively, of the value of oil to the oil-exporting countries. The developing countries’ exports of bauxite, another important mineral, represented 0.7 per cent of this value. These statistics clearly illustrate that even though there was merit in strengthening producers’ associations, an exclusive reliance on such associations would not, in itself, have solved the economic problems of the developing countries.

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Regarding the overall strategy of ECDC, there was also a tendency to focus initially on increased trade cooperation among the developing countries. As Cable17 pointed out, this approach was influenced by traditional regional economic integration theory which emphasised trade expansion as a major objective. However, following the Third Ministerial Meeting of the Group of 77 in Manila in 1976, increased emphasis was placed on cooperation in production among developing countries based, among other things, on industrial complementation arrangements. Such a programme had the potential to ensure the localisation of value-added through the increased processing of raw materials in the developing countries and thus change the traditional pattern of resource use in the international economic system which had operated to the disadvantage of the developing countries. In terms of natural resource endowment, it should be pointed out that while the USA, Canada, the USSR, Australia and South Africa were regarded as the major mineral powers in the world by virtue of the abundance and diversity of their mineral resources, the developing countries, viewed collectively, possessed considerable mineral wealth, including antimony, bauxite, chrome, copper, diamond, iron ore, lead, manganese, nickel, silver, tin and zinc, which were not without major strategic significance.18 In order to demonstrate the potential offered by a serious programme of ECDC, with emphasis on industrial complementarity, during the 1970s and 1980s, to serve as a counterweight to the dominance of the developed countries in the global economy and to bolster the negotiating capacity of the Group of 77 in the quest for the NIEO, it is necessary to highlight the global distribution of natural resources prevailing at the time, with special emphasis on the endowment of the developing countries. Based on 1976 world production figures, Bolivia produced 21.9 per cent of world production of antimony (total world production 69,700 metric tons); Jamaica (14.19 per cent), Guyana (13.9 per cent) and Suriname (6.2 per cent) together produced 34.29 per cent of bauxite (total world production 73,800 thousand metric tons); Brazil (8.3 per cent) and Zimbabwe (7.56 per cent) together produced 15.86 per cent of chrome (total world production 4030 thousand metric tons); Chile (12.66 per cent), Zambia (10.62 per cent) and Zaire (5.54 per cent) together produced 28.82 per cent of copper (total world production 8000 thousand metric tons); Zaire (31 per cent), Botswana (6.19 per cent) and Ghana (5.99 per cent) produced 12.18 per cent of diamonds (including gems and industrial diamonds combined); (total world production 38,100 thousand metric carats); Liberia produced 5.3 per cent of iron ore (total world production 263,799 thousand metric tons); Peru produced 5.49 per cent of lead (total world production 3330 thousand metric tons); Brazil (12.88 per cent),

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Gabon (11.11 per cent) and India (6.76 per cent) together produced 30.75 per cent of manganese (total world production 9840 thousand metric tons); Mexico (13.68 per cent) and Peru (12.13 per cent) together produced 25.81 of silver (total world production 9,690 metric tons); Malaysia (35.26 per cent), Bolivia, (16.86 per cent) Indonesia (13 per cent) and Thailand (11.37 per cent) together produced 66.49 per cent of tin (total world production 179, 800 metric tons); Peru produced 8.27 per cent of zinc (total world production 5520 thousand metric tons); and Niger produced 6.54 per cent of uranium.19 In addition, as is well known, OPEC, which comprises developing countries, held a dominant position in oil production. Although the USA produced significant quantities of raw materials, it depended upon developing countries for critical raw materials such as oil, bauxite, tin and zinc, not to mention such items as chromium, cobalt and manganese, on which the dependence was almost total. The import dependence of the other developed countries of Western Europe and Japan on these materials was even more critical. For example, the member countries of EEC imported 74 per cent of bauxite/alumina, 95 per cent of antimony, 94 per cent of asbestos, 100 per cent of cadmium, 98 per cent of chromium, 100 per cent of cobalt, 100 per cent of columbium, 91 per cent of copper, 82 per cent of iron ore, 69 per cent of lead, 99 per cent of manganese, 99 per cent of nickel, 100 per cent of platinum, 93 per cent of silver, 100 per cent of titanium, 99 per cent of tungsten, 99 per cent of vanadium and 80 per cent of zinc. The corresponding figures for Japan were even higher. These figures illustrate the dependence of the developed countries, during the period of negotiations of the NIEO, on a number of raw materials produced by the developing countries which, in some cases was projected to increase in the future.20 Apart from its strategic significance for the developed countries, this pattern of natural resource endowment provided during the 1970s and 1980s and, indeed, continues to provide, a basis for an effective programme of industrial complementation in the developing world, based on the combined use of these resources in terms of what Cable has called ‘managed complementarity’.21 Such a programme of industrial complementation could have been effected through various modalities such as joint ventures, multinational enterprises and other similar cooperative arrangements among the developing countries. However, the concept of the multinational enterprise offered considerable potential as an organisational model.22 These enterprises, which involve multinational ownership, could have been organised on the basis of joint or combined inputs in the production process and should also have provided for an equitable return on investment in proportion to the inputs of the participating countries. It would also have been necessary to provide for the

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financing, out of the surpluses generated by these enterprises, of the development needs of those developing countries that are poor in resource endowments or which were least developed. This programme of industrial development, based on the processing of raw materials in the developing countries would have created an increased potential for the development of these countries through the localisation of value-added. It would also have created considerable spin-off effects in terms of the stimulation of research and technological development23 and generated increased employment opportunities which would, in turn, have increased incomes and resulted in higher levels of domestic savings and investment in these countries. Moreover, it would have put an end to the virtual monopoly on industrialisation by developed countries based on the utilisation of raw materials from the developing countries which enter as critical inputs in the industrial processes carried out in the developed world. Finally, this strategy of industrialisation would certainly have assisted developing countries to achieve the target of 25 per cent of world industrial output which, as stipulated in the Lima Declaration and Programme of Action for Industrial Development, should have been reached by the year 2000. Indeed, much of the theoretical rationale for this approach to ECDC had been elaborated during the 1970s. A number of studies carried out by UNCTAD during the period stressed the need for increased emphasis to be placed on cooperation in industrial production and underlined specific approaches to the question. The UNCTAD Secretariat, for example, not only strongly supported the case for industrial complementation, but also argued that ….. it may be desirable to replace equity participation by long term loan financing combined with commitments to supply inputs or the purchase of part of the output. Factor complementarity would lead to better use of resources, diversification of production, economies of scale and specialisation ….24 The studies carried out by the UNCTAD Secretariat on the subject indicated, however, that the limited examples of multinational enterprises among developing countries not only tended to follow the traditional pattern of foreign investment based on equity participation of private enterprises producing for the domestic market, but developed on an ad hoc basis. It is clear that there was a need for a more systematic development of the strategy of industrial cooperation oriented towards factor complementarity. It is evident that the success of such enterprises would have depended on suitable technological inputs to complement other factor inputs. However, developing countries such as Brazil and India, had achieved a certain level of

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technological sophistication which would have enabled them to provide the necessary technological inputs.25 In any event, even if this was not possible in some cases, the required technology could always have been purchased from the developed countries. It is true, of course, that commentators such as Cable,26 while arguing in favour of joint industrial programmes among developing countries, pointed to the slow progress made in the Andean and the Asean groups which had embarked on such arrangements. The same was also true of the Caribbean Community (CARICOM) in which Article 46 of the Common Market Annex to the Treaty of Chaguaramas establishing the Community provided for joint industrial programming within the Community. Paul Wonnacott also reminded us that these types of programmes had not only been difficult to negotiate but, ‘once negotiated have not always been observed’.27 While efforts aimed at promoting joint industrial programming within sub-regional and regional economic integration arrangements continued to be valid, newer approaches also envisaged arrangements that went beyond this more limited framework. As the UNCTAD Secretariat observed in 1976, The complementarity of resources on a global scale would widen the economic options of cooperating countries beyond those offered within narrow geographical limits and would expand the possibilities of achieving integrated production structures in underdeveloped countries and in subregional economic groupings having at their disposal a limited range of primary materials.28 Since the theoretical validity of this approach had been amply demonstrated, there was no real excuse for the developing countries not to press on with the implementation of concrete and practical programmes in this area, which would have laid the foundation for the development of a countervailing economic power which, in turn, would have improved considerably their bargaining position in the negotiations with the developed countries.

Current Relevance OF ECDC The approach to ECDC sketched above offered a whole new theoretical framework for the promotion of horizontal cooperation which, if implemented, could have radically altered international economic relations and provided the basis for a new pattern of resource use in the international system. It would

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thus have laid the economic foundations for an accelerated pace of development in the developing countries and put an end to the condition of the underdevelopment that had been perpetuated by the unequal integration of developing countries in the international economic system that was in part determined by the predominance of vertical linkages with the North and a corresponding absence of horizontal links within the South. Even today, this pattern of industrialisation in the developing world is still valid. Certainly, it would need to be supported by appropriate financial arrangements based on the utilisation of the financial resources available in developing countries. However, apart from the mobilisation of the resources available in commercial banks and the various development banks in these countries it would, perhaps, also be useful to revisit the establishment of a Bank for the Developing Countries (the so-called South Bank) which should have as one of its major objectives the financing of suitable industrial complementation arrangements. Such a bank would provide a rational framework for the investment of surpluses available in the developing countries which, in the absence of such a mechanism, have been routinely recycled into the financial institutions of the developed countries and, therefore, become largely subject to the investment decisions of such institutions. In terms of the overall programme of ECDC that has been elaborated by the developing countries, as pointed out previously, the Non-Aligned Action Programme for Economic Cooperation, the Caracas Programme of Action and the Declaration and Programme of Action adopted at the South Summit in Havana in April 2000 have identified a number of important areas for action. However, the projection of a large number of expert groups and other meetings envisaged under these Programmes is likely to pose a major challenge in terms of ensuring effective coordination of the various activities. It will be necessary, therefore to seek to rationalise the implementation of activities carried out under the programme through greater selectivity and the establishment of a clear set of priorities for implementation within a predetermined time frame. In this context, it would seem that in the immediate future the identification and implementation of a number of specific industrial complementation arrangements at the sub-regional, regional and interregional levels and the establishment of suitable financing mechanisms in support of such initiatives should be promoted as two of the major priorities to be carried out under the programme. Conceived within this theoretical and programmatic framework, ECDC has the potential not only to accelerate the pace of development in the developing countries, but also to change the structure of economic power in the international system and thus improve the bargaining position of the developing countries in their effort to promote their economic interests.

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While the merit of the theoretical propositions outlined above cannot be faulted in economic terms, the successful implementation of such a programme during the 1970s and 1980s, which is the period on which the study focuses, was necessarily influenced by political factors and the geopolitical realities of the then prevailing international system which are examined in the next chapter.

NOTES 1.

2.

3. 4.

5. 6.

7.

8. 9. 10.

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The Conference was sponsored by Ceylon (Sri Lanka), Ethiopia, Ghana, Guinea, India, Indonesia, Libya, Mali, Sudan, United Arab Republic (Egypt) and Yugoslavia. In addition to those countries, Afghanistan, Algeria, Bolivia, Brazil, Burma (Myanmar), Cambodia, Congo (Leopoldville), Cuba, Cyprus, the Federation of Malaya, Kuwait, Lebanon, Mexico, Morocco, Pakistan, Saudi Arabia, Somalia, Tanganyika (Tanzania), Tunisia and Yemen participated as full members. Chile, Ecuador, Singapore, Uruguay and Venezuela were represented as observers. Subsequent to the Georgetown Conference, the following countries were appointed as coordinators of the Action Programme: Guyana (trade, transport and industry); India and Indonesia (money and finance); Algeria and Yugoslavia (science and technology); and Egypt and Nigeria (international cooperation for economic development). Action Programme for Economic Cooperation – Trade, Transport and Industry. Guyana was joined by Afghanistan in 1976 as coordinator of this sector of the Action Programme as a result of a decision of the Colombo Summit. Cuba, Iraq, Mozambique and Pakistan subsequently joined Guyana and Afghanistan. The report produced by the project was entitled ‘Pharmaceuticals and the Developing Countries’. By August 1982, contributions to the Account from 25 developing countries amounted to $400,000 with an additional $237,000 in pledges. Since then, there has not been significant growth in contributions to the Account, although the Group of 77 Summit held in Havana in April 2000 called upon governments to increase their contribution to the Account. The first of these resolutions adopted by the Assembly in 1973 was 3177 (XXVIII) of 17 December 1973. During the period 1973 to 1978, the resolutions were drafted by Guyana in its capacity as coordinator of the Trade, Transport and Industry Sector of the Non-Aligned Action Programme. From 1974 to 1978, this responsibility was assigned to the author who served as the Guyana representative on the Second Committee of the General Assembly during that period. See Resolution 90 (IV). The Committee was established by decision 142 (XVI) of 23 October 1976 of the Trade and Development Board. The OECD countries voted against the resolution while the socialist bloc abstained. It should be pointed out, however, that the Division within UNCTAD

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11.

12.

13. 14.

15. 16. 17.

18.

19.

20.

21. 22.

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dealing with ECDC was subsequently eliminated following the restructuring of UNCTAD, thus removing an important institutional support for ECDC. The relative decline in total OPEC aid in 1981 was due to the reduction in the aid programmes of Iran (after the 1979 revolution) and of Iraq in the wake of the Iraq-Iran War. For further statistics on the subject see, for example, ‘The Other Aid Donors’ in The OECD Observer, No. 122, (May 1983), 16–20. For a comprehensive list of these various schemes/arrangements, see the report by the UNCTAD Secretariat entitled ‘Financial Solidarity for Development: Efforts and Institutions of the Members of OPEC 1973–1976’ contained in document No. TD/B/C.7/31 (summary) dated 22 March 1979. See ‘The Other Aid Donors’, op. cit.,17. The activities carried out under the UN Special Fund were formally wound up when the Thirty Eight Session of the General Assembly decided to utilise the remaining accumulated interest to finance mainly ECDC and TCDC activities. Although the Special Fund was not an exclusive institution of the developing countries, but rather an effort which envisaged support from both developing and developed countries, reference is made to it in this context in order to illustrate the difficulty experienced in establishing adequate arrangements to enable the non-oil-producing countries to cope with the adverse economic impact of the increase in oil prices as well as of manufactured goods which occurred during the 1970s and 1980s. The meeting was attended by Algeria, Cuba, India, Iraq, Jamaica, Nigeria and Yugoslavia. Kuwait, which was also invited, did not attend. For a full outline of the Scheme, as presented at the Georgetown Meeting, see Appendix I. Vincent Cable, ‘Prospects for Economic Cooperation Among Developing Countries” in IDS Sussex Bulletin, Vol. II, No. 1, (January 1980), Joint Issue with the Overseas Development Institute (Lessons for the 1980s), editors: Susan Jockee and Christopher Stevens, 59. For a comprehensive description of the distribution of mineral resources globally, see Michael Kidron and Ronald Segal, The State of the World Atlas (A Pluto Press Project), (New York: Simon and Schuster, 1981), and Michael Tanzer, The Race for Resources: Continuing Struggles over Minerals and Fuels, (New York and London: Monthly Review Press, 1980). See Kidron and Segal, op. cit., Maps 13–16. Adding South Africa and Namibia, which are major mineral producers, but which in the 1970s were still in the throes of apartheid, the percentages in favour of the developing countries would be even greater. For example, South Africa produced 16.48 per cent of antimony; 26.97 per cent of chrome; 18.43 per cent of diamonds; 24.48 per cent of manganese and 15.3 per cent of uranium. It should be mentioned also that the French colony of New Caledonia produced 14.79 per cent of nickel. See Michael Kidron and Dan Smith, The War Atlas: Armed Conflict – Armed Peace (A Pluto Press Project), (New York: Simon and Schuster), Notes to the Maps (Note 28). See Vincent Cable, op. cit, 60. The UNCTAD Secretariat has defined multinational enterprises as ‘projects and ventures in which two or more developing countries participate and in

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23.

24.

25.

26. 27.

28.

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which control rests with one or more of the participating countries’ – see ‘Elements of a Programme of Economic Cooperation Among Developing Countries – Report by the UNCTAD Secretariat’, Document TD 192/Supplement I in Proceedings of the UN Conference on Trade and Development, Fourth Session, Nairobi, 5–31 May 1976, Vol. III, Basic Documents, UN, New York, 1978, p.274. However, in this writer’s view, the concept should ideally imply joint ownership of the enterprise by the participating countries. During the 1980s, the Committee for Development Planning also saw the multinational enterprise as a critical instrument for the promotion of joint and coordinated action among the developing countries in the field of production – see ‘Cooperation Amidst Uncertainty: Priorities for International and South-South Action’, Views and Recommendations of the Committee for Development Planning, United Nations, New York, 1982, p.24. It should be pointed out that the exponential technological advances which had taken place in developed countries were largely a function of the concentration of industrial processes in these countries which often utilised the raw material inputs of developing countries. See ‘Economic Cooperation Among Developing Countries: Report by the UNCTAD Secretariat’, Document TD/192 in Proceedings of the UN Conference on Trade and Development, Fourth Session, Nairobi, 5–31 May 1976, Vol. III, Basic Documents, United Nations, New York, 1978, p.247. It should be pointed out that the implementation of such arrangements could have served to reorient the economies of developing countries away from their traditional dependence on developed countries towards a more dynamic process of horizontal economic cooperation and thus provide a basis for them to deal with structural disequilibrium as well as the lingering debt problem. See Cable, op. cit., p.60. Paul Wonnacott, ‘Industrial Allocation in the Andean Pact’ in The Economic Integration Process of Latin America in the 1980s: Proceedings of a Seminar on Economic Integration held in the Inter-American Bank, September 1982, edited by Jose Nunez del Arco, Eduardo Margain and Rachel Cherol, Washington, DC, January 1984. See ‘Economic Cooperation Among Developing Countries: Report by the UNCTAD Secretariat’, Document TD/192 in UNCTAD Proceedings: Fourth Session (previously quoted), 246.

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-8The Political Context of the Negotiations on the New International Economic Order

T

he negotiations on the New International Economic Order, which took place during the period (1974–1984), were carried out against the background of a number of important changes in the international political environment. During the period 1974–1979 the international environment was characterised by a pervasive climate of détente which, in a sense, was a historical hangover from the 1960s and a product of the growing recognition of the need to secure a relaxation of tension between the superpowers in the context of nuclear parity. Détente had resulted in a more open diplomacy in the context of the growth of a multipolar diplomatic structure, as opposed to the previous conflictprone bipolarity which had characterised the East-West ideological struggle at the height of the Cold War era. In this climate, the USA and the USSR tended to rely to a greater extent on diplomatic rather than military means in the pursuit of national objectives. This fostered increased diplomatic competition for the support of developing countries. Consequently, there was, within limits, a readier disposition to accommodate, or at least respond to, the views of developing countries in the global dialogue. On the other hand, the negotiations on the NIEO which took place after 1979, were conducted in an atmosphere significantly different from that which prevailed during the previous five years. With the Soviet invasion of Afghanistan in December 1979, the climate of détente, which had already been weakened to some extent by the Cuban intervention in Angola in 1975, gave way to a renewal of Cold War tensions and the virtual collapse of détente. The advent of a new Republican administration in January 1981 reinstated anti-Sovietism as the cornerstone of US foreign policy and there was a corresponding tendency to view developments in the Third World through this ideological prism. This led to renewed competition between the USA and

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the Soviet Union in different parts of the developing world, but mainly in the Middle East, Africa, South East Asia and Latin America and the Caribbean. These developments were paralleled by changes in a number of governments in the developed world as liberal and democratic socialist regimes were replaced during the late 1970s and early 1980s by more conservative administrations. Apart from the Reagan administration in the US, Prime Minister Margaret Thatcher in Britain and Chancellor Helmut Kohl in the Federal Republic of Germany (as it then was) were perhaps the most conspicuous examples of the new conservative leadership. Only France returned a socialist government under President François Mittérand. This conservative coalition in the West was able to adopt a fairly united stand against the perceived Soviet threat to global order and stability. These changes also marked a radical shift in economic policy in the developed world. There was an expression of renewed faith in laissez-faire economic principles. In this context, private investment was seen as the major vehicle of economic prosperity and was therefore, urged as the solution to the development problems facing the developing countries. Consequently, there was a conspicuous lack of enthusiasm to engage in serious negotiations designed to effect fundamental changes in the international economic system. Indeed, even traditionally conservative institutions such as the World Bank and the IMF came under periodic attack for being too liberal in their dealings with developing countries. All of this reflected a fundamental retreat from multilateralism upon which the entire North-South Dialogue of the period had been premised. Against this background, it is not surprising that attempts to resume global negotiations during the 1980s proved extremely elusive. In terms of the global geopolitical equation, the Middle East had historically served as, and indeed continues to be, an area of conflict and confrontation between Israel and its Arab neighbours, most notably the Palestinians led by the Palestine Liberation Organisation (PLO). For this reason, the Middle East Question and, more particularly, the Palestinian Question, was a major item on the international agenda, especially at the United Nations which was the scene of major debates on the subject. Following the Yom Kippur War of 1973, which triggered the OPEC action in increasing oil prices, there was relative calm until the conclusion, in 1978, of the Camp David Accords between Israel and Egypt, under US sponsorship, and which led to major controversy between Egypt and other Arab countries which were opposed to the agreement. Although providing for the return of the Sinai to Egypt, the agreement in fact failed to deal adequately with the Palestinian problem. Thereafter, considerable energies were spent by the Arab states in seeking to isolate Egypt – a situation which persisted until Anwar Sadat’s assassination in 1981.

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The situation in the Middle East was further complicated by Israel’s invasion of Lebanon in 1982, the ousting of the PLO and the subsequent massacre of Palestinians by the Christian militia at Sabra and Chatila. Continuing conflict between the various political factions in Lebanon served to focus attention on the immediate problem of political survival and, thus, prevented Lebanon and other countries in the region from playing a consistently active role in the discussions on international economic issues which took place during the period. The continuing political problems in the Middle East not only tended to distract attention from international economic issues, but forced the Arab members of OPEC to channel considerable resources to the so-called ‘confrontation states’, such as Syria, Jordan and Egypt, in their struggle with Israel. As was pointed out in the previous chapter, this resulted in a skewing of the pattern of distribution of OPEC aid among developing countries and also prevented the adoption of a rational strategy of ECDC aimed at creating a countervailing economic power in the developing world. The ‘Khomeini revolution’ in Iran in 1979, which succeeded in ousting the Shah, together with the ensuing American hostage crisis during 1980, effectively turned Iran’s attention away from the negotiations on the NIEO, in which it had played a leading role during the early 1970s. Instead, the regime became increasingly preoccupied with efforts to consolidate its domestic revolution. The subsequent outbreak of the Iran-Iraq war in 1980 proved to be the ultimate tragedy in dissipating the energies of two oil-rich Non-Aligned countries in a fratricidal conflict which ran counter to the declared aspirations of the movement for international peace and co-operation. Similarly, the Soviet invasion of Afghanistan in December 1979 ended the latter’s Non-Aligned stance and, for all practical purposes, nullified its influence in the Movement, in which it had played a reasonably active role in the past, as well as in the negotiations on the NIEO. Against the background of Soviet action in Afghanistan and the intensification of East-West rivalry, the Persian Gulf assumed increased geopolitical significance, as was signified by the enunciation in 1980 of the Carter Doctrine which committed the US to the military defence of the oil resources of the Gulf, in the event of a Soviet threat to the area, and the establishment in March 1980 of the Rapid Deployment Force (RDF) which was subsequently renamed the US Central Command (CENTCOM). Not only did Persian Gulf states, namely, Saudi Arabia, Kuwait, Qatar, the United Arab Emirates (UAE), Oman and Bahrain supply two-thirds of the oil needs of the West, but they were generally ‘pro-Western’ in political orientation and therefore served, at the political level, as important allies of the United

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States, particularly in light of their perception of the threat of Soviet expansion towards the Gulf. In fact, Soviet influence in South Yemen, Iraq and Syria together with its occupation of Afghanistan was perceived in some quarters as part of a wider strategy designed to create a security triangle stretching from Ethiopia to South Yemen to Iraq and to Afghanistan in which Saudi Arabia stood as the only major obstacle. In this geopolitical scenario, Saudi Arabia played a critical role and, despite differences with the US on its policies towards Israel and the Palestinian Question, tended to move increasingly closer to Washington because of the perceived Soviet threat as well as its fear of internal ‘revolution’.1 For these reasons, Saudi Arabia generally exercised an important moderating influence on OPEC policies and, in fact, expanded its own oil production to compensate for the fall in overall output resulting from a cutback in Iranian production. Saudi Arabia, therefore, played an important dual role as a major oil supplier to the US and as a bulwark against Soviet expansion in the Gulf. In this latter respect, it relied mainly on the US for military training and equipment, including F-15 fighter planes, to enable it to carry out this role. The assumption of this role and the resultant importation of expensive military equipment, together with a major programme of industrial development, necessitated a recycling of significant surpluses derived from oil revenues back into the economies of developed countries. This, in part, prevented the adoption of a more South-South oriented strategy for the utilisation of oil surpluses based on the investment of such surpluses to finance major development projects in the developing world as part of a comprehensive ECDC programme described in the previous chapter. Extending the geopolitical analysis of the region to encompass the Horn of Africa, it is evident that the Soviet presence in Ethiopia during the period of the Mengistu regime was also perceived as a further threat to the security of the Red Sea which, is, as it were, the soft underbelly of Saudi Arabia. Western fears were accentuated with the establishment of a Soviet naval base in the Dahlak archipelago which is owned by Ethiopia. This, in turn, led the US to increase naval construction on the British-owned island of Diego Garcia located south of the Maldives, thus making the Indian Ocean a potential theatre of military confrontation between the superpowers during the 1980s, instead of a ‘zone of peace’ as the Non-Aligned Movement had demanded. In Africa proper, the struggle in Southern Africa remained paramount. After Zimbabwe gained its independence by casting off the yoke of the Unilateral Declaration of Independence (UDI) imposed by the minority regime of Ian Smith during the 1960s, attention focused on Namibia and, in the longer run, on South Africa itself, which at the time remained a bastion of apartheid.

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In these struggles, African attitudes tended to reflect a strong anti-Western bias because of the support provided by a number of Western countries to South Africa by virtue of its rich mineral resources, its anti-Soviet stance and its strategic role as protector of the Cape which overlooked a critical supply route for the oil exporrs from the Persian Gulf.2 After 1975, the liberation struggle in Southern Africa was complicated by the introduction of an East-West ideological dimension caused by the intervention in Angola by Cuba, which was perceived by the United States as a proxy of the then Soviet Union. Cuban support for the Movimento Popular para a Libertaçâs le Angola (MPLA) in Angola against the more conservative pro-Western forces of Uniâo Nacional para a Independencia Total de Angola (UNITA) and Frente Nacional de Libertacâo de Angola (FNLA) resulted in the establishment of a ‘pro-communist’ regime on the West African coast. The subsequent emergence of another pro-Marxist regime in Mozambique on the east coast of Africa resulted in what was perceived by Western strategists as a major Cuban/Soviet threat to the security of Southern Africa. As will be seen later, the Cuban success resulted in the destabilisation of an important element in the informal Western security network in the Southern Atlantic. The struggle for Namibia can only be understood in this context. There was considerable concern on the part of the Western powers that the liberation of Namibia, given the continuing presence of Cuban troops in neighbouring Angola, would pave the way for the emergence of another pro-Marxist regime in that country and thus extend Cuban/ Soviet influence over a large strip of the west coast of Africa. This was perceived as increasing the threat not only to South Africa itself but also to the control of the critical Cape route which was considered vital to Western security. In North Africa, the struggle by the Polisario Liberation Front for the independence of the Western Sahara brought Morocco, which also claimed the territory, and Algeria, which supported the Polisario Liberation Front, into sharp conflict. The failure to resolve this issue, in spite of OAU intervention and the declarations of the Non-Alignment Movement, proved to be yet another distraction for the developing countries. These various problems consumed a considerable amount of diplomatic energy of the developing countries which could have been focused instead on the struggle for the establishment of a new international economic order which had special significance for Africa, given the comparatively underdeveloped nature of many of the countries of the continent. For this reason, it may be said that the problems associated with a lingering colonialism in Africa during the 1980s also proved to be a major obstacle in the development of the continent.

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In the case of South East Asia, Vietnam’s invasion of Kampuchea (Cambodia), notwithstanding the excesses of the Pol Pot regime, increased the sense of threat on the part of the more moderate regimes in the region, such as Singapore and Malaysia, and thus drove them even closer to the West, particularly in terms of their reliance on the USA to counter the perceived threat of communism in South East Asia. This was an important factor in the debate between ‘moderates’ and ‘progressives’ which took place within the Non-Aligned Movement. Despite regional peculiarities, the geopolitical realities of Latin America and the Caribbean bore a number of similarities to those of the Middle East, Africa and South East Asia when viewed within the framework of the EastWest ideological struggle that had become an increasingly dominant feature of the international system at the time. The countries of Latin America and the Caribbean were traditionally proWestern in their political outlook and sympathies and were bound by close economic ties to North America and Europe, although it is perhaps true to say that the US exercised a preponderant influence in the region. These economic ties were largely the product of US transnational corporate investment in the region and the increasing orientation over the years of these economies towards the US market. At the political level, the ties were accentuated by the continued US perception of the region as a sphere of influence which had, in fact, been a US foreign policy stance ever since the enunciation of the Monroe doctrine during the nineteenth century. The Cuban Revolution of 1959, which led to the ousting of the pro-Western Batista dictatorship, introduced a new and potentially destabilising element in the traditional pattern of hemispheric relations, particularly following the consolidation of the revolution and the confirmation of its pro-Marxist orientation. Prior to the Missile Crisis in 1962, US policy was aimed at ousting Fidel Castro and other members of the Cuban revolutionary leadership. However, the price of the withdrawal of Soviet missiles in Cuba was an informal agreement by the US to recognise Cuba’s territorial integrity. Thereafter, US efforts shifted from active destabilisation of the Cuban leadership to a policy of ensuring Cuba’s isolation in the hemisphere. In pursuance of this policy, US efforts were directed at preventing the establishment of political alliances between Cuba and other states in the region. Following the ousting in 1973 of the pro-Marxist Allende regime in Chile, which had developed close relations with Cuba, both Jamaica, under the democratic socialist government of Michael Manley, and Guyana, which had also established diplomatic contact and other exchanges with Cuba, came under increased US scrutiny during the 1970s.

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Following its own initial efforts to break out of the diplomatic isolation imposed by the US through the unsuccessful sponsorship of revolutionary change in Latin America proper, Cuba sought to adopt a more outward looking policy which extended beyond the confines of the hemispheric system in which the US exercised a virtually unchallenged hegemony. It was the events in Angola in 1975 that provided Cuba with the historic opportunity to become directly involved in the wider ‘anti-imperialist’ struggle in the global system and, more specifically, in the cause of African liberation. As it turned out, Cuba’s intervention in Angola proved decisive in ensuring the political triumph of the pro-Marxist MPLA government which came to power in 1975. It should be mentioned in this context, that Cuba’s intervention in Angola not only succeeded in establishing a pro–Marxist government on the West African coast, but also effectively destabilised an important element of the informal Western security network in the Southern Atlantic, that had been traditionally formed by Brazil and Argentina on the Western Atlantic coast, the Portuguese in Angola and by South Africa. It was for this reason that Henry Kissinger at the time characterised Cuba’s intervention in Angola as ‘a geopolitical phenomenon of not inconsiderable significance’. During the late 1970s, the political dynamics in Latin America were accentuated by the overthrow in 1979 of the Samoza regime in Nicaragua and the emergence of the pro-Marxist Sandinista revolutionary government. Not only did this tend to negate US policy in the hemisphere which, as previously mentioned, was based on the isolation of Cuba, but it also succeeded in establishing a pro-Communist bridgehead in Central America, which it was felt could influence similar revolutionary change in other countries in the sub-region, particularly in El Salvador in which there was an active antigovernment guerrilla movement. The assumption of office by the Reagan administration in 1981 led to the adoption of a decisive strategy to counter the perceived threat of communist expansion in the region through direct political action in El Salvador and military support for the anti-Sandinista guerrillas in Nicaragua. This strategy was accompanied by an economic programme – the so-called Caribbean Basin Initiative – which sought to provide economic benefits to the countries of Central America and the Caribbean in the form of duty-free access to the US market for certain exports, increased aid and a stimulation of the role of private investment as a vehicle for economic development. Subsequently, on the basis of the recommendations of the Kissinger-led US National Bipartisan Commission on Central America, the administration recommended the adoption of a special 5-year $8 billion aid package for the countries of Central America.

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However, while supportive of the broad anti-communist stance, traditional US allies in the region such as Mexico, Colombia and Venezuela, tended to disagree with the Reagan administration by placing greater emphasis on economic and political approaches rather than on a military solution to the crisis in Central America. They also sought to pursue independent initiatives in seeking regional solutions to the problem, as was evidenced by the efforts of the so-called Contadora Group which comprised Colombia, Mexico, Panama and Venezuela. If anything, there was perhaps an even greater assertion of independence on the part of these countries in light of their displeasure at the US stance during the 1982 Falkland Islands (Malvinas) conflict between Argentina and Britain. To some extent, this created a somewhat schizophrenic disposition, as the countries of the region sought to assert a greater degree of diplomatic independence from the US while remaining tied economically, as was demonstrated by the debt crisis, and ideologically by also subscribing to a common anti-communist philosophy. In terms of the ideological configuration of the region, as a result of electoral and other political changes, the original Cuba/Jamaica/Guyana axis which existed during the mid-1970s gave way to a Cuba/Nicaragua/Grenada alliance by the beginning of the 1980s. However, with the overthrow of the ‘proMarxist’ Bishop government in Grenada in October 1983 and the subsequent US intervention which followed in its wake, the pro-Marxist alliance in the region was confined to Cuba and Nicaragua. By the mid-1980s therefore, proSoviet influence in the region had suffered a major setback. In general, the intensification of the East-West ideological struggle in the hemisphere led to some polarisation among the developing countries in Latin America and the Caribbean that created some stresses in the region. In other words, the East-West conflict tended to cut across certain common loyalties based on objective economic interests and sometimes stood in the way of the adoption of common strategies aimed at promoting the development of the countries of the region. Apart from these specific regional and sub-regional developments, viewed in the context of super-power rivalry in the developing world, inter-country conflicts among the developing countries themselves were a major source of distraction. During the period of the negotiations on the NIEO there were ongoing controversies, relating mainly to border or boundary disputes, between Colombia and Venezuela, Brazil and Argentina, Guyana and Venezuela, Belize and Guatemala, Colombia and Nicaragua, Chile and Argentina, Peru and Chile, Iran and Iraq, North Yemen and South Yemen, Ethiopia and Somalia, Algeria and Morocco, and Uganda and Tanzania. The persistence of some of these disputes sapped the energies of the developing countries and distracted

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attention from the wider objective of promoting common action in support of the achievement of a restructuring of the international economic system that had perpetuated the conditions of underdevelopment in the developing world. In addition, following the assumption of the presidency of the Non-Aligned Movement by Cuba after the Havana Summit in 1979, there was an accentuation of the ideological differences between the so-called ‘moderate’ and ‘progressive’ members of the Movement. Although these differences were always implicit, Cuba’s advocacy during the Sixth Summit of the thesis that the world socialist movement was the natural ally of the Non-Aligned Movement was challenged by a number of moderate states, most notably Yugoslavia which, under President Tito, had over the years sought to cultivate the Movement as a buffer against Soviet intervention and interference in that country. Although the thesis, as originally expressed, was modified in the final documents issued by the Havana Conference, during the period 1979–1983 when Cuba served as the Chairman of the Movement, there was a lingering fear on the part of some of the more moderate members that the Movement might take a more radical direction under Cuba’s leadership than they would have wished. As it turned out, however, the need to accommodate the diversity of views within the Movement pushed it continually in the direction of manageable compromises. Nevertheless, the assumption of the leadership of the Movement by India, following the Seventh Summit in New Delhi in March 1983, served to allay the fears of the moderates regarding the future direction of NonAlignment. It is evident from the above that during the period of the negotiations on the NIEO, the international system witnessed a number of developments which exercised an important influence on the negotiations in at least two ways. Firstly, at the broad political level, the collapse of détente which characterised international relations during the early phase of the negotiations and its replacement by an intensification of the East-West ideological struggle served to increase the sense of insecurity of a number of individual developing countries, which in turn led to the adoption of more cautious policies in relation to superpower interests. Secondly, the developing countries themselves dissipated much energy on bilateral struggles and controversies which further distracted attention from the negotiations on change in the international economic system. Nevertheless, it is to the credit of the developing countries that, in spite of these distractions, they maintained an ongoing commitment to change in the international economic system. Moreover, they succeeded in maintaining a broad unity and solidarity in the negotiations with the developed countries. In fact, this emerged as a conspicuous feature of international relations during the period under review. The persistence of the objective conditions of

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underdevelopment and economic dispossession continued to be a powerful stimulus to unity among the developing countries in seeking to change the structure of international economic relations and to promote their accelerated development as an integral part of that process of change, even if strategic considerations at times forced an attenuation of their stance on certain economic issues.

NOTES 1. 2.

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It is significant that the so-called Reagan ‘Codicil’ to the Carter Doctrine recommitted the US to the defence of the region in the event of a Soviet threat. For a discussion of the strategic importance of the Cape route, see Henry F. Jackson, From the Congo to Soweto, U.S. Foreign Policy Toward Africa Since 1960, (New York: Quill, 1984), 216 and 227.

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CONCLUSION

T

he foregoing study describes the negotiations on the New International Economic Order which took place between the developed and the developing countries during the period 1974–1984. In the process, it focuses on the role of the developing countries as actors in the international economic system in the wake of the process of decolonisation and on the development of the objective historical circumstances which led to the demand for a new order. In addition, it provides a comparative analysis of the strategies pursued by the developed and the developing countries in the negotiations. Special attention is paid to the role of the ECDC as a strategy for effecting fundamental changes in the international economic system and thus laying the basis for the creation of a more rational order. This is complemented by an examination of the global geopolitical context in which the negotiations took place and the impact of the changes in that environment on the negotiations. It is a record of high expectations followed by stalemate and an accompanying sense of frustration as the hopes and promises generated during the early 1970s by the articulation of the demand for a comprehensive restructuring of international economic relations and the initial negotiations which followed in its wake, gave way to a sense of despair. This resulted from the failure of the participants in the negotiations to agree on a formula for continuing the negotiations against the background of a significant number of changes in the configuration of power in the international system. Despite the difficulties and disappointments, the unity and commitment of the developing countries to the creation of a new order as a basis for their own accelerated development and renewed global economic prosperity, represented a major achievement of the period. This was accomplished in the face of the increased difficulties and uncertainties in the world economy and

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the threat to their political security and national survival posed by the increased rivalry between the superpowers. In reviewing the lessons of the period, it may be said that the developing countries became, as it were, prisoners of the negotiating process as the vehicle for change. While negotiations were important in promoting international cooperation and understanding, they could not, in themselves, guarantee fundamental change unless the objective circumstances were created to force such change. In a sense, therefore, the increasing disillusionment of the developing countries with the results of the negotiations may, in the long term, have been a blessing in disguise since it served, to some extent, to sensitise them to the need to adopt measures within their own control in order to bring about change. Following this line of analysis, a major thesis of the present study is that during the course of the negotiations on the NIEO, the developing countries had the capacity to effect the desired change in the international economic system through the intensification of economic cooperation among themselves based on industrial complementation arrangements utilising their combined natural resource endowments. Inevitably, this approach posed a major challenge to the prevailing theoretical orthodoxy regarding global economic organisation which reflected predominantly North-South relations, premised on an international division of labour rationalised by notions of comparative advantage and which served to perpetuate the economic dependence and underdevelopment of the developing countries. The developing countries had to compete against a dominant intellectual tradition nurtured in the North, which not only sought to define the nature of the global economic system, but exercised a predominant influence in the formulation of development models for the developing countries. They, therefore, faced an uphill struggle in seeking to challenge the economic orthodoxy which dominated thinking on development issues and the requirements of international economic cooperation. Fortunately, the developing countries were able to begin the process of fashioning instruments to deal with the intellectual imperialism that had become a major feature of the international economic system and which was used as an important weapon to delegitimise the demands of the developing countries. For example, the Third World Forum, which is a loose association of economists from the developing countries, has over the years made an important contribution to the development of ideas in support of the position of the developing countries, particularly in the area of ECDC. Similarly, South, the monthly Third World magazine, and the Third World Quarterly, which used to

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be published in London but which, unfortunately, have since ceased to exist, proved extremely effective in projecting a Third World viewpoint on the issues involved in the North-South Dialogue and were influential in refuting a number of unwarranted assertions made by writers and commentators from the developed world regarding the dialogue. Finally, the Group of 77 Bulletin, published in New York under the auspices of the Chairman of the Group, served as an important medium for the exchange of information among the developing countries, particularly with regard to ECDC matters. While these various mechanisms enabled the developing countries to articulate their views on international economic issues, it is felt in some quarters that the struggle to create a new economic order would have been considerably strengthened by the actual establishment of a Third World secretariat to engage in a more systematic pursuit of the objectives articulated by these countries within the Group of 77. Such a secretariat, it is argued, would have been able to maintain a dual focus by carrying out the necessary research on international economic issues in support of the negotiating positions of the developing countries, while simultaneously furthering the objectives of ECDC. However, lack of consensus within the developing countries on the subject stood in the way of its establishment. It is evident that the central objective of the efforts of the developing countries was the creation of a more open international economic system, subject to democratic decision making and providing for a more equitable distribution of benefits. This vision was contested by an alternative view which believed essentially in the preservation of the prevailing undemocratic ordering of the global system, reflecting the predominance of the developed countries and which resulted in a skewing of the economic benefits in favour of these latter countries. There was, therefore, a fundamental divergence between the perceptions of the developed and the developing countries on this issue. From the perspective of the developing countries, the NIEO represented an irrefutable vision of change in the international economic system that was, in their view, supported by the logic of history. Moreover, its establishment was seen as a moral imperative, since what was believed to be at stake was the elimination of the poverty and dispossession which afflicted vast segments of humanity over large areas of the globe. The choice facing the international community was clear – either effect change designed to harness the tremendous productive capacity of the teeming masses in the developing world or face the wrath of an army of dispossessed in revolt against an intolerable and unconscionable poverty. This stark choice is still very real today and will, therefore, need to be addressed with an increased sense of urgency.

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Viewed from this perspective, the quest for the establishment of the NIEO can be seen as an important episode in an ongoing struggle by the developing countries for the establishment of a just and equitable international economic system. In a sense, therefore, there is a direct line of descent from the negotiations on the NIEO to those currently taking place within the World Trade Organisation (WTO) under the influence of the twin processes of globalisation and liberalisation, although both the context and the balance of forces within the international system have changed significantly since the 1980s. It is interesting, nevertheless, that, as illustrated by the popular protests which occurred in Seattle, Davos, Washington, DC, Genoa and New York City, global civil society has joined the fray in support of many of the issues, including debt reduction, espoused by the developing countries. This is likely to lead to a new alliance between global civil society and the developing countries that will put increased pressure on the developed countries to make further concessions on issues which affect the well-being of the world’s poor. Given the importance of the issues at stake, both developed and developing countries will need to find an accommodation aimed at establishing an international economic system designed to promote global economic prosperity but which, at the same time, must respond to the needs and interests of the people of developing countries, the majority of whom are the victims of unconscionable poverty in a world of plenty.

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appendices

Appendix I

Meeting of Non-Aligned Countries on Mutual Assistance and Solidarity in the Context of the Principle of Collective Self-Reliance Rebate Scheme on Oil Purchase Prepared by Guyana August 1979

An appropriate ‘Rebate Scheme on Oil Purchases’ could provide one of the most effective and direct ways of alleviating some of the difficulties created by the impact of increased oil prices on the economies of the non-oil-producing countries. As originally proposed, the scheme called for both mandatory and voluntary contributions. The mandatory source was to be provided by all oilimporting countries (both developed and developing), while the voluntary component was to be provided by the oil-exporting developing countries and those developed countries with a low dependence on imported oil. However, as outlined in this paper, the scheme is confined to the application of a mandatory levy on oil exports payable by all oil-importing countries (both developed and developing), with the returns being distributed to the oilimporting developing countries in accordance with a specified formula.

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Mechanics of the Scheme The funds for the ‘Rebate Scheme’ would be constituted by the payment by all oil-importing countries of a fixed levy on each barrel of imported crude. This levy could either be statistically fixed to compensate for the increase in oil prices devolving upon the oil-importing developing countries or, alternatively, could be based on a figure negotiated between the oil-producing and non-oil-producing developing countries and would be additional to the market price per barrel of crude fixed by the OPEC countries. The total levy would constitute a ‘mandatory’ contribution to the Scheme. The allocation of ‘rebates’ would be made to the oil-importing developing countries on the basis of the ratio of each developing country’s imports of oil for domestic use to the total imports of all developing countries for domestic use from OPEC countries and other oil-exporting developing countries.

Benefits of the Scheme The ‘Rebate Scheme’ outlined above possesses a number of advantages. Firstly, although it ultimately has the effect of a two-tier pricing system between developed and developing countries, it avoids the considerable practical difficulties involved in the implementation of such a system. Secondly, it does not interfere with the pricing policy of the OPEC and other oil-exporting developing countries, nor does it affect their returns on oil exports. Thirdly, it involves no cost to the oil-exporting developing countries since the major burden of financing will devolve upon the oil-importing developed countries which account for over 80 per cent of the world’s imports from the OPEC countries. In effect, the scheme involves a tax upon the developed countries aimed at offsetting the impact of increased oil prices on the economies of the non-oil-producing developing countries.

Formula for calculating quantum of levy under the Rebate Scheme Under the Rebate Scheme the objective is that: The total cost to the oil-importing developing countries of the price increase plus the levy should be equal to the volume of oil exports of OPEC countries to both developed and developing countries multiplied by the levy.

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Hypothetical statistical example (i)

Assuming that the level of oil exports of OPEC (and other oil-exporting developing countries) during 1979 is 10.14 billion barrels (this figure is in reality the 1977 level of OPEC petroleum exports).

(ii)

Assuming also that the oil imports for domestic use by the oil-importing developing countries during 1979 is 2.03 billion barrels (i.e. 20 per cent of total OPEC exports).

(iii)

Assuming, further, that the average oil price increase during 1979 is US$1.28 per barrel of crude (calculated on a 1977 base price of US$12.70 per barrel of Marker Crude and assuming a 14.50 per cent increase over the year).

(iv)

Based on assumptions (ii) and (iii) the total cost of this price increase to the oil-importing developing countries would be US$2.57 billion.

On the basis of the formula and assumptions stated above, the following equation could be established, assuming a value Y for the levy: 10.14 billion barrels (total OPEC exports) x Y (value of levy) = US$2.57 (cost of increase to oil-importing developing countries) + 2.03 billion barrels (oil imports of oil-importing countries) x Y (value of levy) i.e. 10.14 x Y = US$2.57 + (2.03 x Y) Y = US$0.32¢ This illustrates that a levy of 32¢ per barrel of crude exported by the OPEC and other oil-exporting countries would be sufficient to offset the total price increase plus the levy devolving upon the oil-importing developing countries (based on the stated assumptions about level of exports/imports as well as increase in price). Instead of a fixed sum per barrel of oil, the levy could be calculated as a percentage of the price increase per barrel of oil exported. The essential point is that the returns from the levy should be statistically established at a level designed to offset the increase in oil prices to the developing countries, including payment of the levy, of course. The levy would, therefore, need to be

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revised on the basis of future increases in the price of oil. In elaborating the scheme, consideration would also need to be given to the impact of increased oil prices on the economies of the developing countries since 1974. What is important, at this stage, is for the principle of a rebate scheme to be accepted, following which, the statistical details, including the quantum of the levy, could be elaborated. The above statistical calculations are therefore merely illustrative.

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Appendix II

The Developing Countries (The Group of 77) (1984) Afghanistan* Algeria* Angola* Antigua and Barbuda Argentina* Bahamas Bahrain* Bangladesh* Barbados Belize* Bénin* Bhutan* Bolivia* Botswana* Burkina Faso* (previously known as Upper Volta) Brazil Burma (Myanmar) Burundi* Cape Verde* Central African Republic* Chad* Chile* Colombia Comoros* Congo* Costa Rica Cuba* Cyprus* Democratic Kampuchea (Cambodia) Democratic People’s Republic of Korea* Democratic Yemen* Djibouti* Dominica Dominican Republic

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Ecuador* Egypt* El Salvador Equatorial Guinea* Ethiopia* Fiji Gabon* Gambia* Ghana* Grenada* Guatemala Guinea* Haiti Honduras India* Indonesia* Iran* Iraq* Ivory Coast* (Cote d’Ivoire) Jamaica* Jordan* Kenya* Kuwait* Laos People’s Democratic Republic* Lebanon* Lesotho* Liberia* Libyan Arab Jamahiriya* Madagascar* Malawi* Malaysia* Maldives* Mali* Malta* Mauritania*

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Mauritius* Mexico Mozambique* Nepal* Nicaragua* Niger* Nigeria* Oman* Pakistan* Palestinian Liberation Organisation* Panama* Papua New Guinea Paraguay Peru* Philippines Qatar Republic of Korea Romania Rwanda* Saint Kitts-Nevis Saint Lucia* Saint Vincent and the Grenadines Samoa Sao Tomé and Principe* Saudi Arabia* Senegal* Seychelles* Sierra Leone* Singapore* Solomon Islands Somalia* Sri Lanka* Sudan*

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The Developing Countries (The Group of 77) Suriname* Swaziland* Syrian Arab Republic* Thailand Togo* Tonga Trinidad and Tobago* Tunisia* Uganda* United Arab Emirates* United Republic of Cameroon* United Republic of Tanzania* Uruguay Vanuatu Venezuela Vietnam* Yemen* Yugoslavia* Zaire* (Democratic Republic of the Congo) Zambia* Zimbabwe* * Indicates membership of the Non-Aligned Movement. The membership of the Group of 77 has increased since 1984. It now stands at 132.

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Appendix III

Major Developed Market Economy Countries (1974 – 1984) Australia Austria Belgium Canada Denmark Finland France Germany (previously Federal Republic of Germany) Ireland Italy Japan Netherlands New Zealand Norway Spain Sweden Switzerland United Kingdom United States

* All of the countries listed are members of the Organisation for Economic Cooperation and Development (OECD).

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Appendix IV

The East European Socialist Bloc Countries (during the period 1974-1984)

Albania Bulgaria Czechoslovakia German Democratic Republic (now part of Germany) Hungary Poland Romania USSR

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Appendix V

Organisations Mentioned in the Text Whose Names Have Been Changed ECLA (renamed ECLAC)

-

EEC (now European Union) -

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Economic Commission for Latin America (and the Caribbean) European Economic Community

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(iii) Articles Amuzegar, J. ‘Requiem for the North-South Conference’. Foreign Affairs, LVI. Banks, Ferdinand E. ‘Oil, Debt, Banking and World Recession’. Inter-Economics, No.1, (January/February 1983). Barraclough, Geoffrey. ‘The Struggle for the Third World’. In New York Review of Books, XXV: 17, ( 9 November 1978). Bauer, P.T. ‘Western Guilt and Third World Poverty’. In Commentary, (January 1976). Bauer, P.T., and B.S. Yamey. ‘Against the New Economic Order’. In Commentary, April 1977. ___________. ‘Foreign Aid, What is at Stake’. W. Scott Thompson (ed.), The Third World: Premises of U.S. Foreign Policy (revised edition). San Francisco ICS Press, 1983. Benn, Denis M. ‘The Commonwealth Caribbean and the New International Economic Order”. Anthony Payne and Paul Sutton (eds.), Dependency Under Challenge: The Political Economy of the Commonwealth Caribbean. Manchester: Manchester University Press, 1984. Bolin, William H., and Jorge Del Canto. ‘LDC Debt: Beyond Crisis Management’. Foreign Affairs, 61: 5, Summer 1983. Cable, Vincent. ‘Prospects for Economic Co-operation Among Developing Countries’. In IDS Sussex Bulletin, II, 1 January 1980, (Joint issue with the Overseas Development Institute) (Lesson for the 1980s). Editors, Susan Jockee and Christopher Stevens. Chenery, Hollis B. ‘Poverty and Progress – Choices for the Developing World’. Finance and Development, June 1980. Clark, William. ‘McNamara’s World Bank’. Foreign Affairs, 60, 1, (Fall 1981). Crittenden, Ann. ‘Bank Trim Loans to Third World Amid Fears of Repayment Problem’. New York Times, 14 April 1980. Erbe, Rainer. ‘External Borrowing, Capital Formation and Growth in Developing Countries. In Inter-Economics, January/February 1984. Gallagher, John and Ronald Robinson. ‘The Imperialism of Free Trade’. Economic History Review, 2nd Series, VI, 1, 1953 (reprinted in Great Britain and the Colonies, 1815-1865, edited with an Introduction by A.G.L. Shaw, Methuen & Co., Ltd. 1970). Gilpin, Kenneth N. ‘The Maze of Latin American Debt’. New York Times, 13 March 1983. Griffith-Jones, Stephany. ‘International Monetary and Financial Issues for Developing Countries After UNCTAD V’. Bulletin 1980, II, 1, Institute of Development Studies, Sussex. Halloran, Richard. ‘Poised for the Persian Gulf’. New York Times Magazine, April 1984. Hershey Jnr., Robert P. ‘Ten Years After the Oil Crisis: Lessons Still Uncertain’. New York Times, Sunday, 25 September 1983. _____________. ‘Volcker Suggests Limit on Interest for Third World’. New York Times, Sunday, 13 May 1984. Hicks, Norman L. ‘Growth vs. Basic Needs: Is there a Trade Off?’ World Development, Vol. 7. ______________. ‘Is There a Trade-Off Between Growth and Basic Needs?’ Finance and Development, (June 1980).

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Jamison, Kenneth P. ‘Socialist Cuba and the Intermediate Regimes of Jamaica and Guyana’. In World Development,.9: 9/10, 1981. Khan, Moshin S., and Malcolm D. Knight. ‘Determinants of Current Account Balances of Non-Oil Developing Countries in the 1970s’. IMF Staff Papers, 30, 4,( December 1983). Konrad, Anton. ‘Consequences of Debt Crisis’. Inter-Economics, No. 3, May/June 1983. Lewis, W. Arthur. ‘The State of Development Theory’. The American Economic Review, (March 1984). Madrick, Jeffrey, and William Wolman. ‘The IMF’s Perilous Plan for World Economic Recovery’. New York Times,( 2 October 1983). Moynihan, Daniel P. ‘The U.S. in Opposition’. Commentary, March 1978. O’Neill, Helen. ‘The Need for Economic Co-operation Among Developing Countries’. Bulletin 1980, II, 1, Institute of Developing Studies, Sussex. Onitiri, H.M.A. ‘Economic and Development Policy’. International Social Science Journal, XXXV: 3/ (1983). Prebisch, Raúl. ‘The Crisis of Capitalism and International Trade’. In CEPAL Review, No.20, August 1983. Quibria, M.G. ‘An Analytical Defence of Basic Needs, The Optimal Savings Perspective’. World Development, 10:4, 1982. Renouf, Anthony. ‘The UNCTAD Liner Code: A Critical Dissent’. Bulletin 1980, II: No. 1, Institute of Development Studies, Sussex. Riding, Alan. ‘The New Crisis for Latin American Debt’. New York Times, 11 March 1984. Roett, Riordan. ‘Democracy and Debt in South America: A Continent’s Dilemma’. Foreign Affairs, 62: 3, 1984. Sampson, Anthony. ‘The Money Lenders’. In Newsweek Magazine, 12 October 1981. Sewell, John W., and I.William Zartman. ‘Global Negotiations: Path to the Future or Dead-end Street?’ In Third World Quarterly, 6: 2, April 1984. Shihata, Ibrahim F.I. ‘The North-South Dialogue Revisited: Some Personal Reflections. In Third World Quarterly,.5:.3, July 1983. Silk, Leonard. ‘Debts of the Few Prompt Global Fears’. New York Times, Sunday, 2 October 1983. Vaky, Viron P. ‘Hemispheric Relations: “Everything is Part of Everything Else”’. Foreign Affairs, 59: 3, 1980. Weston, Ann. ‘UNCTAD V: Trade Issues’. Bulletin 1980, II: 1, Institute of Development Studies, Sussex. Wilkens, Herbert. ‘The Debt Burden of the Developing Countries’. Inter-Economics 2, March/April 1983. Williams, Marc. ‘The Group of 77, UNCTAD V and the North-South Dialogue’. In Bulletin 1980, II: 1. Institute of Development Studies, Sussex. Wonnacott, Paul. ‘Industrial Allocation in the Andean Pact’. In The Economic Integration Process of Latin America in the 1980s: Proceedings of a Seminar on Economic Integration held in the Inter-American Bank in September 1982, edited by José Nuñez del Arco, Eduardo Margain and Rachel Cherol, Washington, DC., January 1984.

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(iv) Journals and Periodicals American-Arab Affairs, No. 8, Spring 1984 ECDC Journal of the Group of 77, 1:11, (Summer 1983). Finance and Development, 20: 1, (March 1983). OECD Observer, No. 120, January 1983, and No.122, (May 1983). South, The Third World Magazine (various issues) Third World Quarterly, 5:3, (July 1983), and 6: 2, (1984).

(v)

Pamphlets, Occasional Papers, Special Studies and Reports

Gold, Joseph. ‘Conditionality’. Pamplet Series No. 31, IMF, Washington, DC 1979. Gordon, Lincoln. ‘International Stability and North-South Relations’. Occasional Paper 17, The Stanley Foundation, Muscatine, Iowa, June 1978. Mathieson, John A. ‘U.S. Trade and the Third World: The American Stakes’. Occasional Paper 28, The Stanley Foundation, Iowa, January 1980. Oneill, Helen.’A Common Interest in a Common Fund: Proposals for New Structures in International Commodity Markets’. United Nations, New York, 1977. Renninger, John P., and James Zech. ‘ The 11th Special Session and the Future of Global Negotiations’. UNTAR Policy and Efficiency Studies, New York. Report of Commonwealth Group of Experts. ‘The North-South Dialogue: Making it Work’. Commonwealth Secretariat, London, 1982. ‘Self-Reliance and Countervailing Power’. Report of the Inter-regional Seminar on the New International Economic Order and UNCTAD IV held in Colombo, Sri Lanka, 24-26 March 1976, sponsored by UNCTAD under the auspices of the Third World Forum, Marga Institute, Sri Lanka. ‘The Common Fund.’ Report of the Commonwealth Technical Group, Commonwealth Secretariat, London, September 1977. ‘Towards a New Bretton Woods: Challenges for the World Financial and Trading System’. Report by a Commonwealth Study Group, Commonwealth Secretariat, London, 1983. ‘Towards a New International Economic Order’. Report by a Commonwealth Experts Group, Commonwealth Secretariat, London, 28 August 1976. ‘Towards a New International Economic Order’: A Further Report by a Commonwealth Experts Group, Commonwealth Secretariat, London, 2 March 1976. ‘Towards a New International Economic Order’. A Final Report by a Commonwealth Experts Group, Commonwealth Secretariat, London, 14 March 1976.

(v)

General References

‘Buenos Aires Platform’: Final Document of the Fifth Ministerial Meeting of the Group of 77. Buenos Aires, Argentina, March 28 to April 9, 1983.

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Documents of the Gatherings of Non-Aligned Countries 1961–1978, Jugoslovonska Stvarnost Modjunarodna Politika, Belgrade, 1978. ECDC Handbook. Documents of the Movement of Non-Aligned Countries and the Group of 77, published by the Ministry of External Affairs, India, 1983. A Guide to ECDC: Supplement to the ECDC Handbook, Office of the Chairman of the Group of 77, 27 April 1983. Sauvant, Karl P. The Third World Without Superpowers: The Collected Documents of the Group of 77, Volumes I – VI. New York, London, Rome: Oceana Publications: (1981). The Five Summit Conferences of the Non-Aligned Countries (Documents). Editorial de Ciencias Sociales, Cuba, 1979. World Bank Atlas (1983) World Development Report, 1983 and 1984. World Economic Outlook: A Survey by the Staff of the IMF. Occasional Paper 21, IMF, Washington D.C., 1983; Occasional Paper No. 27, IMF, Washington D.C., 1984

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INDEX

A Abu Dhabi Fund, 162 ACABQ (Administrative Committee on Administrative and Budgetary Questions), 79 ACC (Administrative Committee on Coordination), 79, 83 ACP Group, 6, 16, 41, 55, 56, 101, 110 Action Programme for Economic Cooperation – Trade, Transport and Industry (see APEC-TTI) Afghanistan, 180; Soviet invasion of, 177, 179; American hostage crisis, 179 Amin, Samir, 15, 21, 25, 126 Andean Group, 172 Angola, 181, 183 Cuban intervention in, 177, 181; Apartheid, 180 Arab Fund for Economic and Social Development, 162; Arab-Israeli War (1973), 28 Arusha Programme of Collective SelfReliance and Framework for Negotiations, 100, 118, 155; Asean Group, 172 Asian-African Conference (Bandung), 1

B BADEA (Arab Bank for Economic Development in Africa), 162 Bandung Conference (see Asian-African Conference)

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Bank of Developing Countries (South Bank), 118, 149, 154, 157, 173 Baran, Paul, 115 Barraclough, Geoffrey, 134, 135 Basic needs approach, 115, 128, 129, 141 Bauer, Peter, 129, 131, 132 Bauxite, 17 Beloff, Max, 132 Bergsten, Fred, 21 Bhagwati, Jagdish, 137 Brain drain, 43 Bretton Woods system, 18, 19, 23 Britain, 23 British investment; Australia, 14; Canada, 14; New Zealand, 14; USA, 14; Buenos Aires Platform, 117

C Cable, Vincent, 168, 170, 172 Camp David Accords, 111, 178 Cancun, 116 Caracas Programme of Action, 118, 156, 157, 158, 173 Caribbean Basin Initiative, 183 CARICOM (Caribbean Community), 172 CEESTEM (Centre for the Study of Third World Economic and Social Problems), 64 CENTCOM (see US Central Command) Central America; US National Bipartisan ;

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211

Index

Commission on, 183; Centre for Science and Technology, 148 Chaliand, G., 18 Chatila, 179 Charter of Economic Rights and Duties of States; 28, 30, 32, 35, 37, 38, 45, 46, 47, 49, 50, 70, 74, 153 Working Group of Forty, 35; China, 1, 40, 65 CIEC (Conference on International Economic Cooperation), 48, 49, 50, 69, 70, 71, 73, 84, 87, 96, 127 Clausen, A. W., 131, 132 CMEA, 65, 162, 165, Code of Conduct on Liner Conferences, 106, 123, Cold War, 177 Collective self-reliance, 10, 112, 158 Georgetown Meeting (1979), 113; Colonialism, 13-18, 140 Colonisation, 13, 15 Columbus, 13 Committee for Programme and Coordination (CPC), 79, 80 Committee on the Restructuring of the Economic and Social Sectors of the UN System, 48 Commodities, 17, 51; intergrated programme on, 54, 72, 95-97, 100, 117, 119, 120, 126; Common Fund, 51, 53, 54, 68, 72, 95-98, 100, 104, 117, 120, 122, 126; Negotiating Conference, 96-98; Report of Commonwealth Technical Group, 96; Commonwealth Group of Experts on NIEO, 38, 136 Commonwealth Heads of Government Meeting, London (1977), 96 Commonwealth Ministerial Meeting, London (1977), 96 comparative advantage, theory of, 17 Conference on Raw Materials, Dakar (1975), 28, 147 Conference on the Problems of Economic Development, Cairo (1962), 144 Confrontation states, 162, 179 Consultative Group on Food Production and Investment in Developing Countries, 44; Contadora Group, 184 Cooper, Richard, 130

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211

COPPTECS (Cooperative Pharmaceutical Production and Technology Centres), 154 Corn Laws, Repeal of, 14 Cortés, 13 Cuban Missile Crisis (1962), 182 Cuban Revolution (1959), 182

D DAC countries, 99 Dadzie, Kenneth, 86 Davos, 190 Debt, 139; debt crisis, 139, 140, 141; ‘debt-ploitation’, 140 interest payments, 140; Ministerial Meeting of Trade and Development Board (March 1978), 98, 99, (see also UNCTAD); Decolonisation, 1, 3 DESA (Department of Economic and Social Affairs), 151 D’Estaing, Giscard, 69 Détente, 177, 185 Developing countries, 1; in world trade, 131; support for non-oil producing countries, 164–168, 191—194; Developing Countries Payments Union (DPU), 154 Development, historical dimension, vii, 13-18 Director General for Development and International Economic Cooperation, 44, 74, 80, 81, 82, 83, 84 Discount Scheme for Oil Purchases, 166 Distributive bargaining, 125 DTCD, (Department of Technical Cooperation for Development) 150, 151

E East India Company, 14, 20 East-West; Ideological divide, 2, 177, 181, 184, 185;

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212

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ECA (Economic Commission for Africa), 78 ECDC, 9, 63, 64, 67, 108, 109, 118, 144, 147, 149, 151–155, 157, 158, 160, 161, 167, 168, 171-173, 179, 180, 187-189 Action Committees, 156, 159; Action Plan for Global Priorities, 155; Meeting of governmental experts on ECDC, Geneva (1976), 152; Mexico Conference, 160; UNCTAD Committee on, 108, 118 ECLAC (Economic Commission for Latin America and the Caribbean), 3, 78 ECOSOC, (see United Nations) EEC, (see European Union) Emmanuel, Arghiri, 25, 126 Emergency Operation Special Account, 34 ESCAP, (Economic Commission for Asia and the Pacific) 78, 151, European Recovery Programme (ERP), 19 European Union (EU), 6, 16, 22, 34, 40, 42, 45, 70, 88, ‘Exclusive’, 14 ‘extraversion’, 16

F Factor complementarity, 171 Field, Michael, 139 FNLA, 181 Food and Agriculture Organisation (FAO); Action Programme for the Prevention of Food Losses, 92 France, 52, 68 Frank, André Gunder, 15, 126 free trade imperialism, 14 Fund for the Development of Energy Resources in the Developing Countries, 166 Fund for Financing ECDC, 166

G Gandhi, Indira, 120 GATT, 19, 64, 67, 117, 127 Generalised System of Preferences, 30, 41, 54, 55, 57, 72, 93, 101, 109, 118 Genoa, 190 Georgetown Meeting on Mutual Solidarity and Collective Self Reliance (1979), 167

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212

Germany, 22, 34, 45, 52, 61, 63, 68, 105, 109, 178 Global Civil Society, 190 Globalisation, 190 Global negotiations, new round of, 114, 115, 120 Grenada; overthrow of Bishop Government, 184 Group of 4, 163 Group of 7 Summit (1977), 96 Group of 27, 8 Group of 77, ix, 3, 4, 6-12, 24, 36, 40, 42, 52-55, 57, 60, 63-66, 68, 70, 89, 90, 94, 100, 101-104, 106, 110, 121, 132, 133, 150, 152-160, 189; account for ECDC, 158; African Group, 5; Asian Group, 5; bulletin, 158, 189; Chairman, 7, 68; composition, 4, 11; Coordinator, 7, 8, 12; Core of assistants, 9, 158; Fourth Ministerial Meeting, Arusha (1979), 9, 42, 155; joint declaration, 4, 11; Meeting of Foreign Ministers New York (1979), 9, 121, 157; ministerial meetings, 7; relationship to Non-Aligned Movement, 10; Third Ministerial Meeting (Manila), 4, 152, 168; GSTP (Global System of Trade Preferences among Developing Countries), 108, 118, 150, 153 Guyana, 145, 166, 167, 174, 182

H Havana Charter (1947), 19, 66, 114 Havana Summit (2000), 12 Helleiner, Gerald, 130 Hershey, Jnr., Robert D., 138 Horn of Africa, 180

I IAEA (International Atomic Energy Agency), 75, 77 IBA (International Bauxite Association), 151

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213

Index

IBRD (see World Bank) ICAS (International Commodity Agreements), 97 IEA (International Energy Agency), 138 IFAD (International Fund for Agricultural Development), 39, 44, 49, 92, 163, 164 IMF (International Monetary Fund), 18, 31, 34, 42, 46, 67, 89, 92, 104, 116–118, 121, 127, 178 compensatory financing facility (CEF), 137, 162 Imperialism, viii, 15, 65 Incalculability, 21 Incrementalism, 136 India, 14 Indian Ocean, as zone of peace, 180 Indian textile industry (destruction of), 14 Industrial complementation, 152, 169, 170 Industrial development, 57 Lima Plan of Action, 54 Industrial integration, 152 Industrial programming, 152 Industrial Revolution, 14, 16 Integrative bargaining, 125 Inter-American Development Bank (IDB), 38 Interdependence, 128 Intergovernmental Committee on Raw Materials, 149 Intergovernmental Follow-up and Coordination Committee (IFCC), 157, 158 International Bank for Reconstruction and Development (IBRD) (see World Bank) International Centre for the Exchange of Technological Information, 39 International Commodity Agreements (see ICAS) International Conference on Money and Finance, 120 International Development Association (IDA), 39, 118 International Development Strategy, 29, 31, 48, 49, 70, 114, 115, 119 International Emergency Food Reserve, 92 International Energy Programme, 138 International Finance Corporation (IFC), 39 International Fund for Inflation, 113 International Industrialisation Institute for Research on Industrial Technology, 39

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213

International Investment Bank; Special fund of, 65 International Investment Trust, 39 Investment, returns on, 21 Iran-Iraq War, 179 Iraq, 165 Islamic Development Bank, 162

J Jaleé, Pierre, 15, 21 Jamaica, 164, 167 Japan, 22, 34, 45, 68, 121 Jazairy, Idriss, 122 Johnson, Harry, 130 Joint industrial projects, 157 Joint Inspection Unit, (JIU), 84 Joint ventures, 170

K Kampuchea, Vietnam invasion of, 182 Keynesianism, viii Kindleberger, Charles, 130 Kissinger, Henry, 38, 51, 138, 183 ‘Khomeni Revolution’, 179 Kohl, Helmut, 178 Kuwait Fund for ArabEconomic Development, 162 Laissez-faire, viii Latin American Group, 5, 6 Latin American Structuralism, 126 Law of the Sea, Conference, 62, 72 Lebanon, Israeli invasion of, 179 Lewicki, Roy J., 125 Liberalisation, 190 Lima Declaration and Plan of Action on Industrial Development, 43, 54, 171, Lomé Convention, 6, 41, 56, 95, 110 Lopez Portillo, José, 116

M Magdoff, Harry, 15, 19 Magic of the market, viii

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Multilateral Diplomacy & The Economics of Change

Managed complementarity, 170 Manila Declaration and Programme of Action, 52, 54, 57, 59, 60-63, 65 Michael Manley, 182 Manufactures, 54, 72, 109, 152 Minton, John W., 125 Marcos, Ferdinand, 51, Marshall Plan, 19, 21, 22 Mathieson, John A., 21 Mazrui, Ali, 130, 133 McEachen, Alan J., 86 McNamara thesis, 128 Mercantilism, 14 Mexico Conference on ECDC, 155 Middle East Question, 178 Mittérand, François, 178 Monroe Doctrine, 182 Most favoured nation principle, 19 Moynihan, Daniel P., 38, 129 MPLA, 181, 183 MSA countries, 33, 47, 59, 60, 92, 164 Multilateral trade negotiations (MTNs), 41, 54, 56-58, 72, 103, 104 Multilateral Corporations (see transnational corporations) Multinational enterprises, 171, 175 Multinational marketing enterprises (MMEs), 108, 149 Multinational production enterprises (MPEs), 118, 155, 156

N Nabudere, Dan, 15, 25 Namibia, 180, 181 Nasser, 2 NATO, 21, 22, 23 Natural resources endowment, 169 Navigation Acts, 14 Nehru, 2 Netherlands, 152 New York City, 190 NGOs, (Non Governmental Organisations), 68 NIEO, viii, ix, 9, 29, 33, 34, 40, 45, 46, 48, 49, 66, 68, 85, 87, 89, 92, 93, 100, 103, 111, 113-116, 120, 121, 125–127, 129, 137, 141, 144, 177, 179, 184, 188-190; Declaration and Programme of Action, vii, 29, 32-34, 40, 42, 74, 136

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Non-Alignment, ix, 2, 3, 10, 11, 24, 28, 121, 132, 152-154, 159, 160, 165, 179, 185 Action Programme for Economic Cooperation, 145-147, 149, 150, 154, 173; as catalyst in Group of 77, 10; Coordinating Bureau, 3, 10, 148, 149, 154, 159, 162, 164, 165; Coordinators of Action Programme, 3, 149; Development and Solidarity Fund, (see Solidarity Fund for Economic and Social Development); Algiers Summit (Fourth) (1973), 3, 147, 148; Belgrade Summit (First) (1961), 2; Cairo Summit (Second) (1964), 3; Colombo Summit (Fifth) (1976), 3, 64, 149, 152, 154; Conference of Foreign Ministers, Belgrade (1978), 164; Conference of Foreign Ministers, Georgetown (1972), 145, 149; Georgetown Action Programme, 145, 146, 147, 148; APEC-TTI, 150, 151, 154; Conference of Foreign Ministers, Lima (1975), 148; Havana Summit (Sixth) (1979), 3, 112, 113, 114, 120, 149, 150, 151, 159, 166, 167, 173, 185; Lusaka Summit (Third) (1970), 144, 145, 147, 148; Meeting of Special Government Representatives, Belgrade (1969), 144; Ministerial Meeting of Coordinating Bureau (Colombo, 1979), 111, 113; New Delhi Summit (Seventh) (1983), 3, 120, 137, 150, 185; Preparatory Meeting, Dar-esSalaam (1970), 144; relationship to Group of 77, 10; North South Dialogue, vii, viii, 113, 116, 120, 135-137, 144, 178, 188, 189 North-South model, 131 North-South paradigm, 132 Nyerere, Julius, 144, 145

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215

Index

O

S

ODA, 45, 60, 61, 72, 89, 91, 98, 99, 118, 139 OECD, 9, 23, 69, 135, 138, 165 OPEC, 30, 32, 34, 47, 69-71, 98, 112, 113, 123, 128, 137-139, 141, 151, 161-168, 170, 174, 179, 180; Fund, 162, 164; recycling of surpluses, 139 Overseas Development Council (ODC), 129

Sabra, 179 Sadat; assassination, 178 San José Agreement, 162 Saudi Arabian Fund for Development, 162 Saunders, David M., 125 Scramble for Africa, 14 Seattle, 190 Second World War, 21, 22 SELA, 55, 156 Self-determination, 2 Semi-manufactures, 54, 72, 109, 152 Sewell, John W., 134, 135, 136, 141 Shihata, Ibrahim F. I., 132, Shipping, Flags of convenience, 106-107 Sixth Non-Aligned Summit (see Havana Summit) Slave trade, Abolition, 14 Smithsonian devaluation (1971), 23 Social Imperialism, 65 Solidarity Fund for Economic and Social Development, 148, 157 South, 132, 188 Soviet Union, 2, 23, 34, 65, 109, 177, 178 Special drawing rights (SDRs), 31, 49, 59, 116, 118 Special Fund for Land-locked Countries, 61, 62 State; Minimalist theories of, viii State Trading Organisations (STOs), 118 Stavrianos, 15, 27 Streeten, Paul, 130 Substantial New Programme of Action for LDCs, 118 Sugar Duties Equalisation (1846), 14 Sukarno, 2 Surpluses; recycling of, 180 Sweden, 152 Sweezy, Paul, 15

P Palestinian Question, 180 Paris Conference, (see CIEC) Paris Convention, 105 Perez Guerrero, Manuel, 86 Permanent sovereignty over natural resources, 46 Persian Gulf, 179, 180, 181 Physical quality of life index (PQLI), 129 Pizarro, Francisco, 13 Plantations, 13 PLO (Palestinian Liberation Organisation), 4, 178, 179 Polisario Liberation Front, 181 Portillo, José Lopez, 116 Prebisch, Raúl, 3, 126, Private investment, viii Producers’ associations, 29, 30, 151, 168 Council of Producers’ Associations, 148, 151, 153, 168 Programme of Immediate Measures, 120 Project Development Mechanism for Techno-Economic Cooperation, 150

R Rapid Deployment Force, 179 Reagan Administration, 178, 183 Reagan Codicil, 186 Rebate Scheme on Oil Purchases, 166, 191194 Red Sea, 180 Regional Economic Commissions, 83 Restructuring of the Economic and Social Sectors of the UN System, 74, 84, 88; Ad Hoc Committee, 74; Group of Experts, 74; Ricardo, David, 17 Rothstein, Robert, 134

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215

T TCDC (Technical Cooperation Among Developing Countries), 157 Thatcher, Margaret, 178 Third World, viii, 18, 27, 82, 132, 177 Third World Forum, 188 Third World Magazine, 188

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216

Multilateral Diplomacy & The Economics of Change

Third World Quarterly, 188 Third World Secretariat, 189 Third World Summit, 154 Thompson, W. Scott, 132 Tito, President, 185 Tokyo Declaration, 57, 104 Transfer of real resources, 59, 72 Transfer of technology, 54, 58 code of conduct on, 42, 58, 59, 101, 106, 133; Model of Law for Developing countries on Inventions, 58; Paris Convention for the Protection of Industrial Property, 58 Transnational corporations, 19-22, 72, 127, 182 Information Centre, 148 Treaty of Chaguaramas, 172 Triangular trade, 14 Trudeau, Pierre Elliot, 116

U UNCTAD, 3-6, 16, 33-35, 41, 52-54, 59, 61-68, 75, 77, 82, 95, 96, 98, 99, 103, 106, 107, 109, 110, 115, 119, 127, 151, 153, 154, 159, 160, 161, 171, 172; Committee on ECDC, 160 Preparatory Committee for First Conference, 3; First Conference (UNCTAD I), 4, 11, 27; Second Conference (UNCTAD II), 27, 128; Fourth Conference (UNCTAD IV), 42, 45, 48, 50, 56, 65, 67, 68, 84, 95, 98, 99, 100, 108, 160; Fifth Conference (UNCTAD V), 66, 68, 92, 99, 100, 102, 108, 110, 111, 113, 118, 119, 164; Sixth Conference (UNCTAD VI), 98, 115, 117, 120; institutional issues, 65; Trade and Development Board, 35, 53, 56, 60, 65, 67, 98, 99, 100, 103, 104, 108, 118, 119, 154, 160, 161; UN Conference on Debt, 40 Underdevelopment, 4 historical dimension, vii, 13-18 UN Development Decades, 29, 49, 114, 115

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216

UNDP, 64, 77, 80; country programming, 78; Resident Coordinator, 78, 83; Resident Representative, 83 Unequal exchange, viii, 16, 17, 25, 126 UNIDO, 7, 35, 43, 93, 151 UNITA, 181 UNITAR, 35 United Nations, ix, 1, 2, 3, 8, 24, 30, 46, 69, 75, 137, 151, 178; Charter, 1, 67, 76, 80, 88, 119, ECOSOC, 33-35, 66, 70, 74, 75, 77-79, 80, 82, 88, 90; General Assembly, 4, 7, 28, 29, 32, 33, 35, 50, 70, 76, 77-82, 84, 91, 94, 95, 106, 109, 114, 121, 127, 133, 137, 157, 159, 161, 163; Secretary General, 80-84, 160; Security Council, 76; Sixth Special Session (1974), vii, 7, 12, 28, 35, 40-42, 44, 45, 48, 70, 82, 88, 115, 136, 163, 164 Twenty-eighth Regular Session (1974), 44; Twenty-ninth Regular Session (1974), 28, 32, 35, 38, 44, 45, 70, 163; Seventh Special Session (1975), 12, 28, 35, 38, 42, 44, 45, 48, 50, 55, 56, 59, 67, 68, 74, 88; Thirtieth Regular Session (1975), 48, 50, 68, 75; Thirty-first Regular Session (1976), 73, 74, 87; Thirty-second Regular Session (1977), 74, 80, 87, 163; Thirty-third Regular Session (1978), 82, 83, 87, 91, 108, 115, 163; Thirty-fourth Regular Session (1979), 83, 87, 94, 114, 120; Eleventh Special Session (1980), 94, 113, 114, 120, 123; Thirty-fifth Regular Session (1980), 83, 115, 117, 120; Thirty-sixth Regular Session (1981), 84, 120; Thirty-seventh Regular Session (1982), 84, 120; Thirty-ninth Regular Session (1984), 84; Committee of the Whole (established under resolution 32/ 174), 87-95, 113, 114, 127, 133;

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217

Index

Second Committee, 7 UN Revolving Fund for Natural Resources Exploration (UNRFNRE), 39 UN Special Fund, 163, 175; Ad Hoc Committee, 33, 34, 40, 66, 77, 78, 80, 83, 84; UN Special Programme, 33 UN University, 35 United States, 2, 22, 34, 40, 45, 51, 52, 61, 88, 91, 105, 117, 119, 121, 138, 170, 177, 182, 183; acquisition of Guam (1898), 15; acquisition of Puerto Rico (1898), 15; annexation of Hawaii (1898), 15; University of the West Indies (UWI), ix, US Central Command (CENTCOM), 179 US National Bipartisan Commission on Central America (see Central America) USSR (see Soviet Union) US Trade Act, 56

Z Zartman, I. William, 134, 135, 136, 141

V Value-added, 17, 171

W Washington D.C., 190 West Germany (see Germany) ‘Witteveen Facility’, 162 Wonnacott, Paul, 172 World Bank, 18, 19, 34, 39, 42, 46, 63, 91, 105, 117, 119, 121, 127, 137, 178 World Energy Plan, 116 World Fund on Inflation, 165 World Trade Organisation (WTO), ix, 127, 190

Y Yamey, Basil, 132 Yom Kippur War (1973), 178

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