As Frantz Fanon has warned, “the question which is looming on the horizon is the need for a redistribution of wealth. Humanity must reply to this question, or be shaken to pieces by it.” This implies a redistribution of wealth not only among peoples within nations but also among nations themselves. The United Nations Conference on Trade and Development (UNCTAD) was established in 1964 in an effort to close the gap between the rich industrialized nations and the poorer Third World countries through a readjustment of the inherited trading system. Under this system, the poor nations’ share of world trade has shrunk from 25.4 percent in 1950 to 13.5 percent today (Wall Street Journal, 1/31/68).
Among the many factors contributing to this shrinkage are balance of payments and devaluation crises in the rich countries, debt service burdens in the poor countries and the incursion of synthetics on raw commodities markets. Due to balance of payments crises in the rich countries, there has been a hardening of the terms of credit on which loans have been offered to the poor countries. At the start of the “development decade” (1960’s), it was hoped that the major industrial countries would contribute an average of one percent of their GNP to aid Third World economies. Instead, this percentage has been shrinking steadily from about one percent in 1961 to an estimated 0.5 percent in 1967. In his January 1968 budget message to Congress, President Johnson stated that “more than 90 percent” of U.S. aid spending in fiscal 1969 “will be for purchases made in the United States, and I have directed intensified efforts to increase this percentage” (Wall street Journal, 1/31/68).
Since the poor countries often hold their reserves for foreign trade in the form of pounds or dollars, an event like the devaluation of the pound has severe consequences -it is estimated to have caused a $10.5 million overnight drop in Nigeria’s reserves which are now as low as $135 million, down from $227 million in early 1967 (Wall Street Journal, 1/31/68).
Debt service burdens are further depleting poor countries’ trading reserves. In 1966, the poor nations owed $40 billion to foreign creditors compared with $10 billion in 1955 (Wall Street Journal, 1/23/68). In an article written on the first anniversary of last years Punta del Este conference, a New York Times correspondent reported that, according to one estimate, the Latin American nations’ growing external debt, primarily to the United States, has doubled in the nineteen-sixties. “Service of foreign debt absorbs 75 percent of the fluid capital of the Latin American nations” (The New York Times, 4/16/68).
Synthetic substitutes for several key Third World exports have ct into trading revenues. For example, man-made fibers now account for more than 60 percent of world textile consumption, up from 30 percent a decade ago. The prices of raw commodities exported by the non-industrialized nations have dropped seven percent in the last ten years. An extreme example is rubber, whose price has dropped over 50 percent since 1960 (Wall Street Journal, 1/31/68).
Since UNCTAD was established in 1964, the per capita income of the less developed countries has increased by $2.00 per person per year while that of the richer countries has soared by $60.00 per person per year (The New York Times, 2/14/68). There is little indication that this pattern will change as a result of the UNCTAD II deliberations attended by 1,500 delegates from 131 countries in New Delhi during all of February and March of this year.
Although there were three blocs of delegates-referred to as the North, East and South -the main divisions were between two camps: the rich, predominantly white and industrialized vs. the poor, predominantly non-white and non-industrialized. Seeking to avoid the bitter and embarrassing vote splits of UNCTAD I which clearly pitted the few richest and most racist (and occasionally the United States alone) against the overwhelming majority, the previous voting procedure was abandoned in favor of consensus agreements.*
Meeting beforehand in Algiers during October 1967, the Third World Representatives, known as the “Group of 77” (now 89), drew up a 29-page position paper called “The Charter of Algiers,” which outlined their demands and proposals. The document called for a generalized system of tariff preferences for the manufactured products of poor countries in the markets of the rich, agreements to stabilize the prices and supply of basic commodities, expanded aid on softer terms and favorable adjustment
of shipping rates for the developing countries. They wanted the developed countries to pay one percent of their GNP in aid, compared with the 0.5 percent currently given. They wanted the rich nations to finance the creation of buffer stocks in many commodities, to promise controls on the use of synthetics, and to finance a $400 million annual fund to compensate them for unexpected falls in export income. The Charter also demanded that the industrialized Socialist countries cease their practice of marking up the domestic selling prices of goods imported from the poorer countries, and re-exporting other goods purchased from them.
The Algiers conference authorized seven special missions to “try to convince 25 highly industrialized countries that, apart from the duty of the rich to help the poor, it is in their own interests to increase their imports from the developing countries” (The New York Times, 12/4/67).
In response, the 21 Western rich countries (including Japan) met in Paris in November for a ministerial session of the Organization for Economic Cooperation and Development (OECD) to arrive at a united position before being put on the spot in New Delhi. For nearly two years a committee of the four most powerful members-the “Four Wise Men” from the United States, Great Britain, West Germany and France-had been studying the problem of preferences for poor nations’ products. The United States changed long-standing policy at Punta del Este in April 1967 when President Johnson endorsed, in principle, temporary tariff reductions for developing countries’ exports. It did not, however, win its rich allies to this position. The major European powers refused to give up their special preferential tariff agreements with their former colonies and the final OECD position allowed only for some temporary tariff cuts on manufactured and semi-manufactured Third World exports (details left unspecified). Since these goods account for no more than 15-20 percent of poor countries’ exports, a Chilean delegate quite understandably remarked, “The developed countries are willing to let us sell them et planes and computers, but nothing we have any liklihood of being able to produce” (The New York Times, 3/4/68).
One of the few significant concessions granted by the rich countries was an East European pledge to stop re-exporting goods obtained from poor countries. “Unfortunate” conference timing (Tet offensive in the Third World and monetary crises in the rich nations) and an unmanageable conference structure (in the end there were 133 separate committees) were cited by some as factors in UNCTAD II’s failure.
More basically, UNCTAD II’s failure is symptomatic of any confrontation in which dependent and weak interests gather to petition powerful interests. Cuban representative Ernesto “Che” Guevara suggested at UNCTAD I that the poor nations refuse to pay their debts and interest and band together to work out an independent course. The alternative-and there is increasingly less middle ground between the two positions — was articulated by George W. Ball, lead of the U.S. delegation to UNCTAD I.
The son of a vice president of Standard Oil of Indiana, Ball directed the U.S. World War II Strategic Bombing Survey, helped found the prestigious Washington law firm of Cleary Gottlieb, Steen and Ball, served six years (1961-66) as an Under Secretary of State, and, until his recent appointment as U.S. ambassador to the United Nations, served as head of Lehman Brothers’ international investment banking operations. For Ball, “American multi-national corporations represent a force for world-wide development and peace that is presently being hampered by nationalistic restraints and fears…. Through such corporations…it has become possible for the first time to use the world’s resources with maximum efficiency…. But the multi-national corporation is] ahead of, and in conflict with, existing world political organization represented by the nation-state… Most nation-states..are inadequate as economic units” (Ball, as paraphrased in The New York Times, 5/6/67).
Ball is a geopolitician who gives low priority to the problems and aspirations of the Third World. As he stated in the concluding chapter of his recent book, The Discipline of Power, “A sense of priority dictates that we regard our vital interests… as most heavily concentrated in the world’s north temperate zone.” In an adaptation of his book in an April issue of Life, Ball elaborated: “…at least for the next several decades, the discontent of poorer nations does not threaten world destruction. Shameful as it is, the world has lived at least two-thirds poor and one-third rich for generations. Unjust as it may be, the power of poor countries is limited. They can create local situations of instability and they can appeal to the conscience or cupidity of the industrialized nations, but they do not, given reasonable prudence on our part, have the capacity to precipitate major world conflict.”
For a more thorough documentation and discussion of the nature and origins of the gap between the rich and poor nations, see Pierre Jalee’s The Pillage of the Third World, monthly Review Press, New York, 1968. The statistical data presented is taken primarily from United Nations and World Bank publications.
* For some examples of the voting lineups at UNCTAD I and the 1966 Cocoa Conference, see “Does the U.S. Exploit the Developing Nations?” by David S. French in Commonweal, 5/19/67.
The following are excerpts from a speech made at UNCTAD II by Luis Carlos Galin, secretary to the Colombian delegation (from “Under Present Conditions We Are Going from Underdevelopment to Bankruptcy,” E1 Tieno of Bogoti, 3/8/68).
“In Latin America-acording to ECLA studies [the UN’s Economic Commission for Latin America] -the overall total for financing services in 1966 absorbed 33 percent of the total value of…income from exports….In many Latin American countries today the income of four months each year is set aside to pay the external debt….In 12 years, there will be total bankruptcy….How will we pay these debts? In theory, with the savings from the excesses of commercial balance [of payments] or the increase in our savings rate. In practice, neither option exists. In the first case…the structure of international trade…constantly punishes our exports. In the second…we have very limited possibilities for internal savings….
“It is well to remember that the developed countries acquired their economic power owing, in great part, to the exploitation of our natural resources…. (W)hen it is counseled today that we develop capital, that we mobilize our internal resources… it is forgotten that we do not have the same opportunities that were enjoyed by the developed countries owing to the system of capitalization that they imposed on other countries and to certain internal circumstances that facilitated their accumulation of capital.
“…Furthermore, everyone knows that while we confront at this time the task of developing our economies and simultaneously achieving a more democratic distribution of income, the wealthy nations developed their capital in the nineteenth and part of the twentieth century by exploiting their workers and peasants, by paying extremely low salaries.”
