PRESS
DEPARTMENT OF STATE

[LC]

September 1, 1975

NO. 457

REMARKS OF
THE HONORABLE HENRY A. KISSINGER
SECRETARY OF STATE
AT THE KING DAVID HOTEL
AFTER A MEETING AT
PRIME MINISTER RABIN'S OFFICE
JERUSALEM

September 1, 1975

**QUESTION:** Good morning, Mr. Secretary. Do you have results on the agreement?

**SECRETARY KISSINGER:** As I told you earlier, we had a few technical details to work out.

**QUESTION:** Are they worked out now, sir?

**SECRETARY KISSINGER:** We had a number of issues that we had to examine. I think that we have substantially concluded our negotiations. The Israeli Cabinet is now going to meet and will make a decision during the course of the day. Afterwards, we will know what to do.

**QUESTION:** Were there any contacts with Egypt during the course of these negotiations today?

**SECRETARY KISSINGER:** We had a pretty good idea of the Egyptian position and of course we had presented the Israeli position in Egypt during the day. So it was clear what was needed to move the parties and we knew the span within which both sides were willing to move. We have been in touch during the course of the night with Egypt, however.

**QUESTION:** Have the negotiators, then, from both sides agreed on a text at the moment?

**SECRETARY KISSINGER:** My impression is yes. We have to make one more check.

**QUESTION:** Are there any loose ends remaining, sir, or are all the facts now known? Are the lines known, the numbers of personnel --

**SECRETARY KISSINGER:** No, there is no more negotiating to be done.

**QUESTION:** All has been resolved; all the numbers are known; all the figures; all the details are all finished?

**SECRETARY KISSINGER:** Yes.

**QUESTION:** Where does that check have to be made? You said one more check has to be made.

For further information contact:

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PR # 457

**SECRETARY KISSINGER:** Well, we have to compare texts and so forth to make sure.

**QUESTION:** Is it still your hope to go to Alexandria tonight or stay here tonight?

**SECRETARY KISSINGER:** It depends how long the deliberations of the Israeli Cabinet will last. If at all possible I would like to go to Alexandria before the end of the evening.

**QUESTION:** Are all the bilateral understandings now completely worked out as well?

**SECRETARY KISSINGER:** We have completed. Yes, it is finished.

**QUESTION:** One hundred per cent?

**SECRETARY KISSINGER:** I would say the bilateral discussions are finished.

**QUESTION:** Mr. Secretary, when will the political, economic and diplomatic concessions to Israel be made public?

**SECRETARY KISSINGER:** Well, why don't you wait until all the documents will be made public and then you can judge for yourself which fall into which category.

**QUESTION:** Will they be all made at the same time -- the military lines as well as the political all at once?

**SECRETARY KISSINGER:** Yes.

**QUESTION:** As far as you are concerned now, sir, this is a success -- have you done what you came to do?

**SECRETARY KISSINGER:** Well, why don't we wait till the end of the day.

**QUESTION:** Will the Israeli-American document be made public also?

**SECRETARY KISSINGER:** I do not think so.

* * * * *

The Secretary
of State

DEPARTMENT OF STATE
UNITED STATES OF AMERICA

Speech

GLOBAL CONSENSUS AND
ECONOMIC DEVELOPMENT

The following address by Secretary of State Henry
A. Kissinger was delivered by Daniel P. Moynihan,
U.S. Representative to the United Nations, at the
Seventh Special Session of the U.N. General As-
sembly:

We assemble here this week with an oppor-
tunity to improve the condition of mankind. We
can let this opportunity slip away, or we can re-
pond to it with vision and common sense.

The United States has made its choice. There
are no panaceas available-only challenges. The
proposals that I shall announce today on behalf of
President Ford are a program of practical steps,
responding to the expressed concerns of developing
countries. We have made a major effort to develop
an agenda for effective international action; we are
prepared in turn to consider the proposals of
others. But the United States is committed to a
constructive effort.

For some time the technical capacity has ex-
isted to provide a tolerable standard of life for the
world's 4 billion people. But we-the world com-
munity-must shape the political will to do so. For
man stands not simply at a plateau of technical
ability; he stands at a point of moral choice. When
the ancient dream of mankind-a world without
poverty - becomes a possiblity, our profound
moral convictions make it also our duty. And the
convening of this Special Session bears witness that
economic progress has become a central and urgent
concern of international relations.

The global order of colonial power that lasted
through centuries has now disappeared; the cold
war division of the world into two rigid blocs has

September 1, 1975

United Nations, N.Y.

Bureau of Public Affairs

Office of Media Services

now also broken down, and major changes have
taken place in the international economy. We now
live in a world of some 150 nations. We live in an
environment of continuing conflicts, proliferating
weapons, new ideological divisions, and economic
rivalry. The developing nations have stated their
claim for a greater role, for more control over their
economic destiny, and for a just share in global
prosperity. The economically advanced nations
have stated their claim for reliable supplies of ener-
gy, raw materials, and other products, at a fair
price; they seek stable economic relationships and
expanding world trade, for these are important to
the well-being of their own societies.

These economic issues have already become
the subject of mounting confrontations-
embargoes, cartels, seizures, countermeasures, and
bitter rhetoric. Over the remainder of this century,
should this trend continue, the division of the
planet between North and South, between rich and
poor, could become as grim as the darkest days of
the cold war. We would enter an age of festering
resentment, of increased resort to economic war-
fare, a hardening of new blocs, the undermining of
cooperation, the erosion of international
institutions-and failed development.

Can we reconcile our competing goals? Can
we build a better world, by conscious purpose,
out of the equality and cooperation of states? Can
we turn the energies of all nations to the tasks
of human progress? These are the challenges of our
time.

We profoundly believe that neither the poor
nor the rich nations can achieve their purposes in

PR 450

2

isolation. Neither can extort them from the other—the developing countries least of all, for they would pay the greater cost of division of the planet, which would cut them off needlessly from sources of capital and markets essential to their own progress.

The reality is that ample incentives exist for cooperation on the basis of mutual respect. It is not necessarily the case that if some grow worse off, others will be worse off. But there is an opposite proposition, which we believe is true: that an economic system thrives if all who take part in it thrive. This is no theory, it is our own experience: and it is an experience that we, a people uniquely drawn from all the other peoples of the world, truly desire and hope to share with others. Therefore it is time to go beyond the doctrines left over from a previous century that are made obsolete by modern reality.

History has left us the legacy of strident nationalism—discredited in this century by its brutal excesses a generation ago, and by its patent inadequacy for the economic needs of our time. The economy is global. Recessions, inflation, trade relations, monetary stability, gluts and scarcities of products and materials, the growth of transnational enterprises—these are international phenomena and call for international responses. History has also left us discredited doctrines of economic determinism and struggle. One of the ironies of our time is that systems based on the doctrine of materialism, that promised economic justice, have lagged in raising economic welfare.

And contrary to the ideologies of despair, many developing countries have been increasing their per capita incomes at far faster rates than obtained historically in Europe and North America in comparable stages of their growth.

It is also ironic that a philosophy of nonalignment, designed to allow new nations to make their national choices free from the pressure of competing blocs, now has produced a bloc of its own. Nations with radically different economic interests and with entirely different political concerns are combined in a kind of solidarity that often clearly sacrifices practical interests. And it is ironic also that the most devastating blow to economic development in this decade came not from “imperialist rapacity” but from an arbitrary, monopolistic price increase by the cartel of oil exporters.

The reality is that the world economy is a single global system of trade and monetary relations on which hinges the development of all our economies. The advanced nations have an interest in the growth of markets and production in the developing world; with equal conviction we state that the developing countries have a stake in the markets, technological innovation, and capital investment of the industrial countries.

Therefore the nations assembled here have a choice: We can offer our people slogans, or we can offer them solutions; we can deal in rhetoric, or we can deal in reality. My Government has made its choice.

The United States firmly believes that the economic challenges of our time must unite us, and not divide us. So let us get down to business. Let us put aside the sterile debate over whether a new economic order is required or whether the old economic order is adequate. Let us look forward and shape the world before us. Change is inherent in what we do, and what we seek. But one fact does not change: that without a consensus on the realities and principles of the development effort, we will achieve nothing.

* There must be consensus, first and foremost, on the principle that our common development goals can be achieved only by cooperation, not by the politics of confrontation.

* There must be consensus that acknowledges our respective concerns and our mutual responsibilities. All of us have rights and all of us have duties.

* The consensus must embrace the broadest possible participation in international decisions. The developing countries must have a role and voice in the international system, especially in decisions that affect them. But those nations who are asked to provide resources and effort to carry out the decisions must be accorded a commensurate voice.

We have learned from experience that the methods of development assistance of the 1950's and 1960's are no longer adequate. Not only did the technical accomplishments of many programs fall short of expectations, the traditional approaches are less acceptable to the industrialized world because they have seemed to become an end-less and one-sided financial burden. And they are

3

less acceptable to the developing world because they have seemed to create a relationship of charity and dependency inconsistent with equality and self-respect.

Therefore we must find new means. The United States offers today concrete proposals for international actions to promote economic development. We believe that an effective development strategy should concentrate on five fundamental areas:

* First, we must apply international cooperation to the problem of insuring basic economic security. The United States proposes steps to safeguard against the economic shocks to which developing countries are particularly vulnerable: sharp declines in their export earnings from the cycle of world supply and demand, food shortages, and natural disasters.

* Second, we must lay the foundations for accelerated growth. The United States proposes steps to improve developing countries' access to capital markets, to focus and adapt new technology to specific development needs, and to reach consensus on the conditions for foreign investment.

* Third, we must improve the basic opportunities of the developing countries in the world trading system so they can make their way by earnings instead of aid.

* Fourth, we must improve the conditions of trade and investment in key commodities on which the economies of many developing countries are dependent, and we must set an example in improving the production and availability of food.

* Fifth, let us address the special needs of the poorest countries, who are the most devastated by current economic conditions, sharing the responsibility among old and newly wealthy donors.

The determination of the developing nations to mobilize their own effort is indispensable. Without it, no outside effort will have effect. Government policies to call forth savings, to institute land reform, to use external aid and capital productively, to manage and allocate national resources wisely, to promote family planning—for these there are no substitutes.

But there must be international as well as national commitment. The United States is prepared to do its part. The senior economic officials of our Government have joined with me in developing our approach. Treasury Secretary Simon,

with whom I have worked closely on our program, will discuss it tomorrow in relation to the world economy. The large Congressional delegation that will attend the session, and the seriousness with which they and the Executive branch have collaborated in preparing these proposals, are evidence of my country's commitment. We ask in return for a serious international dialogue on the responsibilities which confront us all.

## Insuring Economic Security

Our first task is to insure basic economic security. The swings and shocks of economic adversity are a global concern, tearing at the fabric of developed and developing nations alike. The cycle of good times and bad, abundance and famine, does vast damage to lives and economies. Unemployment, falling standards of living, and the ravages of inflation fuel social and political discontent. We have recently seen the corrosive effects in many countries.

Developing economies are by far the most vulnerable to natural and man-made disasters, the vagaries of weather and of the business cycle; sharp increases in the prices of oil and food have a devastating effect on their livelihood. Recessions in the industrial countries depress their export earnings.

Thus economic security is the minimum requirement of an effective strategy for development. Without this foundation, sound development programs cannot proceed and the great efforts that development requires from poor and rich alike cannot be sustained.

And because economic security is a global problem, it is a global challenge:

* The industrial nations must work together more effectively to restore and maintain their non-inflationary expansion;

* Nations which supply vital products must avoid actions which disrupt that expansion; and

* The international community must undertake a new approach to reduce drastic fluctuations in the export earnings of the developing countries.

Since the economic health of the industrial countries is central to the health of the global economy, their efforts to avoid the extremes of recession and inflation become an international, as well as a national, responsibility.

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In a new departure this past year, the leaders of the United States and its major trading partners have begun closer coordination of their national economic policies. A shared sense of urgency and the exchange of information about trends and intentions have already influenced important policy decisions. President Ford intends to continue and intensify consultations of this kind. The successful recovery of the industrial economies will be the engine of international stability and growth.

Global economic security depends, secondly, on the actions of suppliers of vital products. Thus the United States has believed that the future of the world economy requires discussions on energy and other key issues among oil-consuming and producing nations. The Government of France is inviting industrialized oil-producing and developing nations to relaunch a dialogue this fall on the problems of energy, development, raw materials, and related financial issues. The United States has supported this proposal and worked hard to establish the basis for successful meetings.

But this dialogue is based on an approach of negotiation and consensus, not the exercise of brute economic power to gain unilateral advantage. The enormous, arbitrary increases in the price of oil of 1973 and 1974 have already exacerbated both inflation and recession worldwide. They have shattered the economic planning and progress of many countries. Another increase would slow down, or reverse, the recovery and the development of nearly every nation represented in this Assembly. It would erode both the will and the capacity in the industrial world for assistance to developing countries. It would, in short, strike a serious blow at the hopes of hundreds of millions around the world.

The forthcoming dialogue among consumers and producers is a test. For its part, the United States is prepared for cooperation. We will work to make it succeed, in our own self-interest and in the interest of all nations. We hope to be met in that same spirit.

The third basic factor in economic security is the stability of export earnings. The development programs - indeed the basic survival - of many countries rest heavily on earnings from exports of primary products which are highly vulnerable to fluctuations in worldwide demand. Countries which depend on one product can find their revenues reduced drastically if its price drops or if ex-

ports fall precipitously. Most have insufficient reserves to cushion against sharp declines in earnings, and they cannot quickly increase the exports of other products. Facing such economic problems, most cannot borrow to offset the loss, or can only do so at extremely high interest rates. In such situations countries are frequently forced to cut back on the imports on which their growth and survival depend. Thus the unpredictability of export earnings can make a mockery of development planning.

The question of stabilization of income from primary products has become central in the dialogue on international economic concerns. Price stabilization is not generally a promising approach. For many commodities it would be difficult to achieve without severe restrictions on production or exports, extremely expensive buffer stocks, or price levels which could stimulate substitutes and thereby work to the long-range disadvantage of producers. Even the most ambitious agenda for addressing individual commodities would not result in stabilization arrangements for all of them in the near term. And focusing exclusively on stabilizing commodity prices would not provide sufficient protection to the many developing countries whose earnings also depend on the exports of manufactured goods.

The U. S. Government has recently completed a review of these issues. We have concluded that, because of the wide diversity among countries, commodities, and markets, a new, much more comprehensive approach is required—one which will be helpful to exporters of all commodities and manufactured goods as well.

Let me set forth our proposal: The United States proposes creation—in the International Monetary Fund [IMF]—of a new development security facility to stabilize overall export earnings.

* The facility would give loans to sustain development programs in the face of export fluctuations—up to $2.5 billion, and possibly more, in a single year, and a potential total of $10 billion in outstanding loans.

* Assistance would be available to all developing countries which need to finance shortfalls in export earnings, unless the shortfalls are caused by their own acts of policy.

* The poorest countries would be permitted to convert their loans into grants under prescribed conditions. These grants would be financed by the

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5

proceeds of sales of IMF gold channeled through
the proposed $2 billion trust fund now under
negotiation.

* Eligible countries could draw most, or under certain conditions all, of their IMF quotas in addition to their normal drawing rights. Much of that could be drawn in a single year, if necessary: part automatically; part subject to balance-of-payments conditions; and part reserved for cases of particularly violent swings in commodity earnings.

* Shortfalls would be calculated according to a formula geared to future growth as well as current and past exports. In this way the facility helps countries protect their development plans.

* This facility would replace the IMF's compensatory finance facility; it would not be available for industrial countries.

The United States will present its detailed proposals to the board of directors of the IMF this month.

This development security facility would provide unprecedented protection against disruptions caused by reductions in earnings—both for countries whose exports consist of a few commodities and for those with diversified and manufactured exports whose earnings also fluctuate with business cycles. In the great majority of countries this new facility will cover nearly all the earnings shortfall.

This new source of funds also reinforces our more traditional types of assistance; without the stabilization of earnings, the benefits of concessional aid for developing countries are vitiated. For industrialized countries it means a more steady export market. For developing countries it helps assure that development can be pursued without disruption and makes them more desirable prospects in international capital markets. For consumers and producers, rich and poor alike, it buttresses economic security. Thus the success of our efforts in this area will demonstrate that our interdependence can stengthen the foundations of prosperity for all while promoting progress in the developing countries.

## Accelerating Economic Growth

It is not enough to insure the minimal economic security of the developing countries. Development is a process of growth, of acceleration, of greater productivity, higher living standards, and social change. This is a process requiring the in-

fusion of capital, technology, and managerial skills on a massive scale.

Developing countries themselves will have to provide most of the effort, but international support is indispensable. Even a moderate acceleration of recent growth rates will require some $40 billion a year in outside capital by 1980. The requirement for technological innovation, though impossible to quantify, is similarly great.

How can these needs for capital, technology, and skills be met?

Bilateral concessional assistance from the industrialized countries has been one important source. Last year it amounted to some $7.2 billion. This must continue to grow. But realistically we cannot expect the level to increase significantly over the coming years. To put it frankly, the political climate for bilateral aid has deteriorated. In the industrial countries, support for aid has been eroded by domestic economic slowdown, compounded by energy problems; in the developing countries, there is resentment at forms of assistance which imply dependence.

The oil exporters have only begun to meet their responsibility for assistance to the poorer countries. Last year their concessionary aid disbursements were roughly $2 billion; they could, and must, rise substantially this year. But the industrial nations and the oil exporters cannot, even together, supply all the new resources needed to accelerate development. It follows inescapably that the remaining needs for capital and technology can only be met, directly or indirectly, from the vast pool of private sources. This investment will take place only if the conditions exist to attract or permit it. The United States therefore believes it is time for the world community to address the basic requirements for accelerating growth in developing countries:

* First, developing countries must have better access to capital markets;

* Second, we must promote the transfer of technology;

* Third, it is time to reach an international consensus on the principles to guide the beneficial operation of transnational enterprises.

First, access to capital markets. The private capital markets are already a major source of development funds, either directly or through intermediaries. The World Bank [International

6

Bank for Reconstruction and Development]and the regional development banks borrow extensively to lend to developing nations. The United States urges the expansion of these programs. We are gratified that advanced countries outside of the Western Hemisphere are joining us shortly in a $6 billion expansion of the Inter-American Development Bank. We will participate in negotiations for replenishment of the Asian Development Bank; and we are seeking Congressional authority to join the African Development Fund.

But the developing countries that have been most successful and that no longer require concessional aid, especially in Asia and Latin America, have relied heavily on borrowing in the capital market. Their future access must be assured. We must now find new ways to enhance the opportunities of developing countries in the competition for capital. And we need to match in new ways potential sources of capital with the investment needs of developing countries.

Several courses of action offer promise. First, the United States will support a major expansion of the resources of the World Bank's International Finance Corporation [IFC]—the investment banker with the broadest experience in supporting private enterprise in developing countries. We propose a large increase in the IFC's capital, from the present $100 million to at least $400 billion.

Secondly, the United States proposes creation of an International Investment Trust to mobilize portfolio capital for investment in local enterprises. The trust would attract new capital by offering investors a unique opportunity: participation in a managed broad selection of investments in developing country firms—public, private, and mixed. The IFC would manage it and perhaps provide seed capital, but most of its funds would come from government and private investors. Investors would have their exposure to major losses limited by a $200 million loss-reserve, provided by governments of industrialized, oil-producing, and developing nations. This institution could be a powerful link between the capital market and the developing world, and could provide billions of dollars of essential resources.

Thirdly, the United States will contribute actively to the work of the IMF/World Bank Development Committee to find ways to assist developing countries in their direct borrowing in the

capital market. It is encouraging that the Latin American countries are considering a regional financial safety net to underpin their access to capital markets by mutual commitments of financial backing.

Finally, we believe that all industrial countries should systematically review the conditions for developing-country access to their national markets, to assure that they offer fair and open opportunity. The United States is prepared to provide technical assistance and expertise to developing countries ready to enter long-term capital markets, and we ask others to join us.

Developing countries need not only new funds but also new technology. Yet the mechanisms for the transfer of technology and for its local development are limited, and are seldom at the sole command of national governments, and the technologies of industrial countries must often be adapted to local economic and social conditions. New institutions and new approaches are therefore required.

For technology to spur development, it must spur growth in priority areas: energy, food, other resources strategic to their economies, and industrialization itself.

* First, energy is critical for both agricultural and industrial development. The enormous rise in the cost of oil in the last 2 years has more than wiped out the total of the foreign aid that developing countries have received. It has undermined their balance of payments and has mortgaged their future by forcing them into larger borrowing at higher interest rates. There is no easy short-term solution, but if energy dependence is to be reduced, efforts to exploit new and diversified sources must be intensified now.

The United States invites other nations to join us in an increase of bilateral support for training and technical assistance to help developing countries find and exploit new sources of fossil fuel and other forms of energy.

Methods of discovering and using less accessible or low-grade resources must be fully utilized. So must technology to produce solar and geothermal power. And these techniques must be suited to the conditions of the developing countries.

The United States believes the topic of energy cooperation should be high on the agenda for the forthcoming dialogue between consumers and pro-

7

ducers. We will propose, in this dialogue, creation of an International Energy Institute bringing together developed and developing, consumer and producer, on the particular problem of energy development. The International Energy Agency and the International Atomic Energy Agency should both find ways to give technical assistance and support to this Institute.

* A second critical area for technological innovation is food production and improvement of nutrition.

During the past decade, a number of international agricultural research centers have been established to adapt techniques to local needs and conditions. In 1971 the Consultative Group for International Agricultural Research was formed to coordinate these efforts. The United States is prepared to expand the capacity of these institutions. In collaboration with national research organizations with more skilled manpower and funds, they could grow into a worldwide research network for development of agricultural technology.

We are also supporting legislation in the Congress to enable our universities to expand their technical assistance and research in the agricultural field.

* Non-food agricultural and forestry products are a third strategic area for technological assistance. The export earnings of many of the poorest countries and the livelihood of many millions of their people depend on such products as timber, jute, cotton, and natural rubber, some of which have encountered serious problems in the face of synthetics. They urgently need assistance to improve the productivity and competitiveness of these products and to diversify their economies.

The United States therefore proposes creation of an organization to coordinate and finance such assistance. Its task will be to attract manpower and capital for research. The financing of this effort should be a priority task for the new International Fund for Agricultural Development.

* But developing countries' need for technology is not only for development of strategic sectors, but for the broad promotion of industrialization itself. This requires the broadest application of skills, resources, and information.

This is not an easy task. The storehouse of technology is already huge and is growing geometrically.

Developing practical devices to transfer technology beyond those which already exist will require careful thought. We are prepared to join with other nations in examining new initiatives.

To this end the United States supports creation of an International Industrialization Institute, to sponsor and conduct research on industrial technology together with the governments, industries, and research facilities of developing countries.

We support creation of an International Center for the Exchange of Technological Information, as a clearing house for the sharing of ongoing research and new findings relevant to development.

We will expand our bilateral support of industrial technology appropriate to developing country needs.

We will work with others in this organization in preparing guidelines for the transfer of technology and in the planning of a conference on science and technology for development.

Access to capital markets, and special programs to transfer new technology, are but two factors of accelerated growth. There is a third which may well be one of the most effective engines of development—the transnational enterprise.

Transnational enterprises have been powerful instruments of modernization both in the industrial nations, where they conduct most of their operations, and in the developing countries where there is often no substitute for their ability to marshal capital, management skills, technology, and initiative. Thus the controversy over their role and conduct is itself an obstacle to economic development.

It is time for the world community to deal with the problems, real and perceived, that have arisen. If the nations assembled here cannot reach consensus on the proper role of these enterprises, the developing countries could lose an invaluable asset. Let us make this issue a test of our capacity to accommodate mutual concerns in practical agreement.

For our part, the United States is prepared to meet the proper concerns of governments in whose territories transnational enterprises operate. We affirm that enterprises must act in full accordance with the sovereignty of host governments and take full account of their public policy. Countries are entitled to regulate the operations of transnational enterprises within their borders. But countries

8

wishing the benefits of these enterprises should
foster the conditions that attract and maintain
their productive operation.

The United States therefore believes that the
time has come for the international community to
articulate standards of conduct for both enterprises
and governments. The United Nations Commission
on Transnational Corporations, and other interna-
tional bodies, have begun such an effort. We must
reach agreement on balanced principles. These
should apply to transnational enterprises in their
relations with governments, and to governments in
their relations with enterprises and with other
governments. They must be fair principles, for fail-
ure to reflect the interests of all parties concerned
would exacerbate rather than moderate the fric-
tions which have damaged the environment for
international investment.

Specifically, the United States believes that:

* Transnational enterprises are obliged to obey local laws and refrain from unlawful intervention in the domestic affairs of host countries. Their activities should take account of public policy and national development priorities. They should respect local customs. They should employ qualified local personnel, or qualify local people through training.

* Host governments in turn must treat transnational enterprises equitably, without discrimination among them, and in accordance with international law. Host governments should make explicit their development priorities and the standards which transnational enterprises are expected to meet, and maintain them with reasonable consistency.

* Governments and enterprises must both respect the contractual obligations that they freely undertake. Contracts should be negotiated openly, fairly, and with full knowledge of their implications. Greater assurance that contracts will be honored will improve the international commercial environment, increase the flow of investment, and expand economic transactions. Destructive and politically explosive investment disputes, which spoil the climate for large commitments and investment, will occur less frequently.

* Principles established for transnational enterprises should apply equally to domestic enterprises, where relevant. Standards should be addressed not only to privately-owned corporations, but also to

state-owned and mixed transnational enterprises,
which are increasingly important in the world
economy.

A statement of principles is not the only, or
necessarily a sufficient, way of resolving many of
the problems affecting transnational enterprises.
We must develop others:

* Governments must harmonize their tax treatment of these enterprises. Without coordination, host-country and home-country policies may inhibit productive investment.

* Fact-finding and arbitral procedures must be promoted as means for settling investment disputes. The World Bank's International Center for the Settlement of Investment Disputes, and other third-party facilities, should be employed to settle the important disputes which inevitably arise.

* Laws against restrictive business practices must be developed, better coordinated among countries, and enforced. The United States has long been vigilant against such abuses in domestic trade, mergers, or licensing of technology. We stand by the same principles internationally. We condemn restrictive practices in setting prices or restraining supplies, whether by private or state-owned transnational enterprises or by the collusion of national governments.

* Insurance for foreign private investors should
  to the extent possible be multilateralized, and
  should include financial participation by develop-
  ing countries to reflect our mutual stake in en-
  couraging foreign investment in the service of
  development.

* And there must be more effective bilateral consultation among governments to identify and resolve investment disputes before they become irritants in political relations.

The United States believes that just solutions
are achievable—and necessary. If the world com-
munity is committed to economic development, it
cannot afford to treat transnational enterprises as
objects of economic warfare. The capacity of the
international community to deal with this issue
constructively will be an important test of whether
the search for solutions or the clash of ideologies
will dominate our economic future. The implica-
tions for economic development are profound.

9

## Trade and Development

The third basic area for our attention is trade. Improving the world trading system will magnify our success in every other sphere of the development effort. Trade has been a driving force in the unprecedented expansion of the world economy over the last 30 years. Comparative advantage and specialization, the exchange of technology and the movement of capital, the spur to productivity that competition provides—these are central elements of efficiency and progress. Open trade promotes growth and combats inflation in all countries.

For developing nations, trade is perhaps the most important engine of development. Increased earnings from exports help pay for both the imports that are essential to expand production and the food for growing populations. These earnings reduce dependence on aid, limit the accumulation of debt, and help finance essential borrowing. Growing export industries can provide jobs and increase the government revenues necessary for development programs. It is no accident, therefore, that the success stories in development of the past three decades have been those very countries that have taken full advantage of the opportunities in world trade.

But today the global trading system is threatened by the most serious recession since the Second World War. We face the danger of proliferating artificial barriers, and unfair competition reminiscent of the 1930's which contributed to economic and political disaster. Every day that economic recovery is delayed the temptation grows to restrict imports, subsidize exports, and control scarce commodities. Concerted action is necessary now to safeguard and improve the open trading system on which the future well-being of all our countries depends. The multilateral trade negotiations now taking place in Geneva are central to this effort. They will have a profound impact on the future of the world economy and the prospects for development. If these negotiations fail, all countries risk a slide into an increasingly fragmented, closed world of nationalism, blocs, and mounting frictions. If they succeed, all countries will benefit and there will be major progress toward a cooperative and prosperous world.

Many of the less-developed nations are emerging as important commercial powers. But developing countries need assistance to take better advantage of trading opportunities, especially to help

them open up new markets. In revising rules to govern trade we must take account of their particular needs. In this connection, regional trading associations can help many small countries by providing the economies of scale which result from larger markets.

Thus, success in the negotiations depends critically on promoting the interests of the developing countries. For if they do not help to make the rules, assume part of the responsibility to maintain a stable trade system, and share in the benefits of trade, the rules will be subject to increasing challenge, the stability of the system undermined, and the benefits for all nations jeopardized.

The United States therefore believes that a major goal of the multilateral trade negotiations should be to make the trading system better serve development goals. Let me briefly outline our policy.

First, there must be fundamental structural improvement in the relationship of the developing countries to the world trading system. In the earlier stages of their development, they should receive special treatment through a variety of means—such as preferences, favorable concessions, and exceptions which reflect their economic status. But as they progress to a higher level of development, they must gradually accept the same obligations of reciprocity and stable arrangements that other countries undertake. At some point they must be prepared to compete on more equal terms, even as they derive growing benefits.

Second, we must improve opportunities for the manufacturing sectors of developing countries. These provide the most promising new areas for exports at the critical stage in development, but the tariffs of industrial countries are a substantial obstacle. To ease this problem the United States has agreed to join other industrial countries in instituting generalized tariff preferences to permit developing countries enhanced access to the markets of industrialized nations.

I am pleased to announce today that the U.S. program will be put into effect on January 1, 1976. And before that date we will begin consultations and practical assistance to enable exporting countries to benefit from the new trade opportunities in the American market—the largest single market for the manufactured goods of developing countries.

10

Third, in keeping with the Tokyo Declaration, we should adapt rules of nontariff barriers to the particular situation of developing countries. In setting international standards for government procurement practices, for example, the United States will negotiate special consideration for the developing countries. We will also negotiate on the basis that, under prescribed conditions, certain subsidies may be permitted without triggering countervailing duties for a period geared to achieving particular development objectives.

Fourth, we will work for early agreement on tariffs for tropical products, which are a major source of earnings for the developing world. Moreover, the United States will implement its tariff cuts on these products as soon as possible.

Finally, we are ready to join with other participants in Geneva to negotiate changes in the system of protection in the industrialized countries that favors the import of raw materials over other goods. Many countries impose low or no duties on raw materials and high duties on manufactured or processed goods; the tariff protection increases or "escalates" with the degree of processing. Nothing could be better calculated to discourage and limit the growth of processing industries in developing countries. The United States will give high priority in the Geneva negotiations to reducing these barriers.

The developing countries have obligations in return. The world needs a system in which no nation, developed or developing, arbitrarily withholds or interferes with normal exports of materials. This practice-by depriving other countries of needed goods-can trigger unemployment, cut production, and fuel inflation. It is therefore as disruptive as any of the other trade barriers I have discussed. We urge negotiations on rules to limit and govern the use of export restraints, a logical extension of existing rules on imports. The United States will join others in negotiating supply-access commitments as part of the reciprocal exchange of concessions. But commodities can be addressed only in part in the context of the trade negotiations. For some serious commodity problems, special arrangements and different institutional structures are required. Let me now turn to that subject.

## Commodity Trade and Production

Exports of primary products—raw materials and other commodities—are crucial to the incomes of developing countries. These earnings can lift living standards above bare subsistence; generate profits to support the first steps of industrialization; and provide tax revenues for education, health, and other social programs for development. The history of the United States—and many other countries—confirms the importance of commodities.

But this path can be precarious in an uncertain global environment. Those developing countries which are not oil exporters rely on primary commodities for nearly two-thirds of their export earnings. Yet their sales of raw materials and agricultural products have not grown as fast as those of industrial countries. Agricultural commodities, particularly, are vulnerable to the whims of weather and swings of worldwide demand. The market in minerals is especially sensitive to the pendulum of boom and bust in the industrial countries. The result is a cycle of scarcity and glut, of underinvestment and overcapacity.

Developing countries are hit hard by commodity cycles also as consumers; higher prices for energy imports, swings in the price and supply of food, and greater costs for other essential raw materials have been devastating blows, soaking up aid funds and the earnings by which they hoped to finance imports. All this can make a mockery of development plans.

But the problems of commodities are not the problems only of developing countries. The industrialized countries are in fact the largest exporters of food and most minerals. Gyrating prices complicate economic decisions in industrial countries. And consumers in industrial countries have painfully learned that high commodity prices leave their inflationary impact long after the commodity market has turned around. Therefore, both industrial and developing countries would benefit from more stable conditions of trade and an expansion of productive capacity in commodities.

Many solutions have been put forward to benefit producers of particular products; cartelizations, price indexing, commodity agreements, and other methods. But reality demonstrates the interdependence of all our economies and, therefore,

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the necessity for approaches that serve global rather than narrow interests.

The most vital commodity in the world is food. The United States is its largest producer and exporter. We recognize our responsibility. We have also sought to make international collaboration in food a model for realistic and cooperative approaches to other international economic issues.

The U.S. policy is now one of maximum production. At home, we want a thriving farm economy and moderate prices for consumers. Internationally we wish cooperative relations with nations that purchase from us, an open and growing market, and abundant supplies to meet the needs of the hungry through both good times and bad.

For hundreds of millions of people, food security is the single most critical need in their lives; for many it is a question of life itself. But food security means more than emergency relief to deal with crop failures, natural disasters, and pockets of famine. It means reasonable stability in the availability of food in commercial markets, so that harvest failures in some parts of the world will not make food impossibly expensive elsewhere. We have seen with dramatic frequency in recent years how the international food market, strained to capacity, can shake the international economy. Its fluctuations have accelerated inflation, devastated development plans, and wreaked havoc with human lives. Yet in good times, the world community has not summoned the will to take obvious corrective steps to stabilize the market structure.

The United States believes that a global approach to food security, which contains elements that can apply to other commodities, should follow these basic principles:

* The problem must be approached globally, comprehensively, and cooperatively, by consultation and negotiation among all significant producers and consumers;

* Producers should recognize the global interest in stability of supply, and consumers should recognize the interest of producers in stability of markets and earnings;

* Special consideration should be given to the needs of developing countries; and

* Where volatile demand is combined with limited ability to make short-term increases in pro-

duction, buffer stocks may be the best approach to achieving greater security for both consumers and producers.

At the World Food Conference last November, which was convened at our initiative, the United States proposed a comprehensive international cooperative approach to providing food security. We proposed an international system of nationally-held grain reserves, to meet emergencies and improve the market. The United States has since then offered specific proposals and begun negotiations. But the international effort lagged when improved harvests seemed to diminish the immediate danger of worldwide shortage. My Government today declares that it is time to create this reserve system. If we do not, future crises are inevitable.

Specifically, we propose:

* To meet virtually all potential shortfalls in food grains production, total world reserves must reach at least 30 million tons of wheat and rice. We should consider whether a similar reserve is needed in coarse grains.

* Responsibility for holding reserves should be allocated fairly, taking into account wealth, production, and trade. The United States is prepared to hold a major share.

* Acquisition and release of reserves should be governed by quantitative standards such as anticipated surpluses and shortfalls in production.

* Full participants in the system should receive assured access to supplies. Among major producers, full participation should require complete exchange of information and forecasts.

* Special assistance should be extended to developing countries that participate, to enable them to meet their obligation to hold a portion of global reserves.

The United States is ready to negotiate the creation of such a system. Let us move ahead rapidly. And let us apply the same approach of cooperation to other primary commodities that are similarly beset by swings of price and supply, and that are similarly essential to the global economy. There is no simple formula that will apply equally to all commodities. The United States therefore

12

proposes to discuss new arrangements in individual
commodities on a case-by-case basis.

Buffer stocks can be an effective technique to
moderate instability in supplies and earnings. On
the other hand, price-fixing arrangements distort
the market, restrict production, and waste re-
sources for everyone. It is developing countries
that can least afford this waste. Restricted produc-
tion idles the costly equipment and economic in-
frastructure that takes years to build. Artificially
high prices lead consumers to make costly invest-
ment in domestic substitutes, ultimately eroding
the market power of the traditional producers.

Accordingly, the United States proposes the
following approach to commodity arrangements:

* We recommend that a consumer-producer forum be established for every key commodity to discuss how to promote the efficiency, growth, and stability of its market. This is particularly important in the case of grains, as I have outlined. It is also important in copper, where priority should be given to creating a forum for consumer-producer consultation.

* The first new formal international agreement being concluded is tin. We have participated actively in its negotiation. President Ford has authorized me to announce that the United States intends to sign the tin agreement, subject to Congressional consultations and ratification. We welcome its emphasis on buffer stocks, its avoidance of direct price-fixing, and its balanced voting system. We will retain our right to sell from our strategic stockpiles, and we recognize the right of others to maintain a similar program.

* We are participating actively in negotiations on coffee. We hope they will result in a satisfactory new agreement that reduces the large fluctuations in prices and supplies entering the market.

* We will also join in the forthcoming cocoa and sugar negotiations. Their objective will be to reduce the risks of investment and moderate the swings in prices and supplies.

* We will support liberalization of the IMF's financing of buffer stocks, to assure that this facility is available without reducing other drawing rights.

I have already announced my Government's
broad proposal of a development security facili-
ty—a more fundamental approach to stabilizing the

overall earnings of countries dependent on com-
modities trade. My Government also believes that
an effective approach to the commodities problem
requires a comprehensive program of investment to
expand worldwide capacity in minerals and other
critical raw materials. This is basic to the health of
both industrial and developing economies.

There are presently no shortages in most basic
raw materials; nor are any likely in the next 2 or 3
years. But the adequacy of supplies in years to
come will be determined by investment decisions
taken now. Because the technology for processing
lower-grade ores is extremely complex, and the fi-
nancing requirements for major raw materials in-
vestments are massive, new projects take several
years to complete. In some countries the tradi-
tional source of funds—private foreign invest-
ment—is no longer as welcome, nor are investors as
interested, as in the past. The United States there-
fore proposes a major new international effort to
expand raw material resources in developing coun-
tries.

The World Bank and its affiliates, in concert
with private sources, should play a fundamental
role. They can supply limited amounts of capital
directly; more importantly, they can use their tech-
nical, managerial, and financial expertise to bring
together funds from private and public sources.
They can act as intermediary between private in-
vestors and host governments, and link private and
public effort by providing cross guarantees on per-
formance. World Bank loans could fund govern-
ment projects, particularly for needed infrastruc-
ture, while the International Finance Corporation
could join private enterprise in providing loans and
equity capital. The World Bank group should aim
to mobilize $2 billion in private and public capital
annually.

In addition, the United States will contribute
to, and actively support, the new United Nations
revolving fund for natural resources. This fund will
encourage the worldwide exploration and exploita-
tion of minerals, and thus promote one of the most
promising endeavors of economic development.

The Poorest Nations

Any strategy for development must devote
special attention to the needs of the poorest coun-
tries. The fate of 1 billion people—half the devel-
oping world and a quarter of mankind—will be af-
fected by what we do or fail to do.

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13

For the last 4 years, per capita income in the poorest countries—already below minimal standards for development—has declined. Their exports are most concentrated in the least dynamic sectors of world demand. It is they who have been most cruelly affected by the rise in the costs of oil, food, and other essential imports.

Whatever adversity the rest of mankind endures, it is these peoples who endure the most. Whatever problems we have, theirs are monumental. Whatever economic consequences flow from the decisions that we all make, the consequences are greatest for them. If global progress in economic development falters, they will be submerged. This challenge transcends ideology and bloc politics. No international order can be considered just unless one of its fundamental principles is cooperation to raise the poorest of the world to a decent standard of life.

This challenge has two dimensions. We must look to elemental economic security and the immediate relief of suffering. And we must give preference to these countries' needs for future economic growth.

First, security means balance-of-payments support for the poorest countries during periods of adversity. For them global recessions and wide swings in prices of key commodities have a particularly disastrous impact. Yet these countries have very little access to short- and medium-term capital to help them weather bad times. The little finance to which they have access often involves interest rates that are too high, considering their chronic debt repayment problems.

To provide greater balance-of-payments support at more acceptable rates of interest for the poor nations, the United States last November proposed a trust in the IMF of up to $2 billion for emergency relief. Although this proposal met with wide support, it has been stalled by a dispute over an unrelated issue—the role of gold in the international monetary system. We cannot let this delay continue. The United States is making a determined effort to move forward the monetary negotiations at the IMF meetings now underway. If others meet us in this same spirit, we could reach a consensus on the trust fund by the next meeting in January.

Secondly, security requires stable export earnings. The new approach that we are proposing today for earnings stabilization can provide major

new economic insurance in the form of loans and grants for the poorest countries.

Thirdly, security means having enough to eat. There must be determined international cooperation on food.

* The World Food Conference set a target of 10 million tons of food aid annually. This fiscal year the U.S. food aid budget provides for almost 6 million tons of food-grains—60 percent of the world target, and a 20 percent increase over last year. Other producers must also provide their share.

* Another priority in the poorest countries must be to reduce the tragic waste of losses after harvest from inadequate storage, transport, and pest control. There are often simple and inexpensive techniques to resolve these problems. In investment in such areas as better storage and pesticides could have a rapid and substantial impact on the world's food supply: indeed, the saving could match the total of all the food aid being given around the world. Therefore we urge that the Food and Agriculture Organization, in conjunction with the U.N. Development Program and the World Bank, set a goal of cutting in half these postharvest losses by 1985, and develop a comprehensive program to this end.

Finally, security means good health and easing the strains of population growth. Disease ravages the poorest countries most of all and exacts a devastating economic as well as human cost. At the same time, we face the stark reality that there will be twice as many people to feed by the end of this century as there are today. One of the most promising approaches to these problems is the integrated delivery of basic health services at the community level, combining medical treatment, family planning, and nutritional information, and using locally trained paramedical personnel. The United States will support a major expansion of the efforts already underway, including those in cooperation with the World Health Organization, to develop and apply these methods. We strongly urge the help of all concerned nations.

Programs to achieve minimum economic security, however essential, solve only part of the problem. We must help the poorest nations break out of their present stagnation and move toward economic growth. This means first of all that they should have preferential access to official, conces-

14

visionary financial aid. They have the least dynamic exports, but they lack the capital to develop new ones. They have the direst need for financing, but they have no access to capital markets and little ability to carry greater debt.

If these countries themselves can summon the effort required, outside assistance can be productive. All nations with the financial capacity must share the responsibility. We will do our part. More than 70 percent of our development assistance goes to low-income countries. More than 60 percent of this year's proposed programs is devoted to food and nutrition, which are of particular importance to the poorest.

The special financial needs of the poorest countries can be met, particularly well by expanded, low-interest loans of the international financial institutions. The International Development Association of the World Bank group is a principal instrument whose great potential has not been fully realized. After Congressional consultations, the United States will join others in a substantial fifth replenishment of the resources of the International Development Association, provided that the oil exporting countries also make a significant contribution.

An effective strategy for sustained growth in the poorest countries must expand their agricultural production. For external food aid cannot possibly fill their needs. The current gap between what the developing countries need and what they can produce themselves is 15 million tons; at present rates of growth, the gap is expected to double or triple within the next decade. Failure to meet this challenge will doom much of the world to hunger and malnutrition and all of the world to periodic shortages and higher prices.

Traditional bilateral aid programs to boost agricultural production remains indispensable. President Ford is asking Congress for authorization to double our bilateral agricultural assistance this year to $582 million. We urge the other affluent nations to increase their contributions as well.

Clearly a massive program of international cooperation is also required. More research is needed to improve agricultural yields, make more efficient use of fertilizer, and find better farm management techniques. Technical assistance and information exchange are needed for training and for techno-

logical advance. Better systems of water control, transportation, and land management are needed to tap the developing countries' vast reserves of land, water, and manpower.

To mobilize massive new concessional resources for these purposes, the United States proposes the early establishment of the new International Fund for Agricultural Development. President Ford has asked me to announce that he will seek authorization of a direct contribution of $200 million to the fund-provided that others will add their support for a combined goal of at least $1 billion.

The International Fund for Agricultural Development can be the major source of new capital to attack the most critical problems of the poorest developing countries. The United States urges the world community to give it prompt and major support.

## The Political Dimension

In every area of endeavor that I have described-economic security, growth, trade, commodities, and the needs of the poorest-the developing countries themselves want greater influence over the decisions that will affect their future. They are pressing for a greater role in the institutions and negotiations by which the world economic system is evolving. The United States believes that participation in international decisions must be widely shared, in the name of both justice and effectiveness. We believe the following principles should apply:

**The process of decision should be fair.** No country or group of countries should have the exclusive power in the areas basic to the welfare of others. This principle is valid for oil. It also applies to trade and finance.

**The methods of participation must be realistic.** We must encourage the emergence of real communities of interest between nations, whether they are developed or developing, producer or consumer, rich or poor. The genuine diversity of interests that exists among states must not be submerged by bloc discipline or in artificial, unrepresentative majorities. For only genuine consensus can generate effective action.

**The process of decision should be responsive to change.** On many issues developing countries

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15

have not had a voice that reflects their role. This is
now changing. It is already the guiding principle of
two of the most successful international bodies,
the IMF and the World Bank, where the quotas of
oil-producing states will soon be at least doubled—
on the basis of objective criteria. Basic economic
realities, such as the size of economies, participa-
tion in world trade, and financial contributions,
must carry great weight.

Finally, participation should be tailored to
the issues at hand. We can usefully employ many
different institutions and procedures: Sometimes
we should seek broad consensus in universal
bodies, as we are doing this week in this Assembly;
sometimes negotiations can more usefully be
focused in more limited forums, such as the forth-
coming consumer-producer dialogue; sometimes
decisions are best handled in large, specialized
bodies such as the IMF and World Bank, where
voting power is related to responsibility; and some-
times most effective action can be taken in regional
bodies.

Most relevant to our discussion here is the
improvement of the U.N. system, so that it can
fulfill its charter mandate to employ international
machinery for the promotion of the economic and
social advancement of all peoples. We welcome the
thoughtful report by the Secretary General's group
of 25 experts on structural reform in the U.N.
system. We will seriously consider its recommen-
dations. In our view, an improved U.N. organiza-
tion must include:

* Rationalization of the U.N.'s fragmented as-
sistance programs;

* Strengthened leadership within the central Secretariat and the entire U.N. system for development and economic cooperation;

* Streamlining of the Economic and Social Council;

* Better consultative procedures to insure ef-
fective agreement among members with a partic-
ular interest in a subject under consideration; and

* A mechanism for independent evaluation of the implementation of programs.

The United States proposes that 1976 be
dedicated as a year of review and reform of the
entire U.N. development system. An intergovern-
mental committee should be formed at this session,

to begin work immediately on recommendations
that can be implemented by the General Assembly
in its 1976 session. We consider this a priority in
any strategy for development.

Conclusion

I began today with the statement that we
have, this week, an opportunity to improve the
condition of mankind. This fact alone represents
an extraordinary change in the human condition.
Throughout history, man's imagination has been
limited by his circumstances, which have now fun-
damentally changed. We are no longer confined to
what Marx called *the realm of necessity*. And it has
always been the case that the wisest realists were
those who understood man's power to shape his
own reality.

The steps we take now are not limited by our
technical possibilities, but only by our political
will. If the advanced nations fail to respond to the
winds of change, and if the developing countries
choose rhetoric over reality, the great goal of econ-
omic development will be submerged in our com-
mon failure. The speeches made here this week will
be placed alongside many other lofty pronounce-
ments made over decades past in this organization
on this subject, buried in the archives of oblivion.
But we would not all be here if we did not believe
that progress is possible and that it is imperative.

The United States has proposed a program of
action. We are prepared to contribute, if we are
met in a spirit of common endeavor.

* We have proposed steps to improve basic eco-
nomic security, to safeguard the world economy,
and particularly the developing countries, against
the cruel cycles that undermine their export earn-
ings.

* We have proposed measures to improve devel-
oping countries' access to capital, new technology,
and management skills to lift themselves from stag-
nation onto the path of accelerating growth.

* We have proposed structural improvements in the world trading system, to be addressed in the ongoing multilateral trade negotiations, to enhance developing countries' opportunities to earn their own way through trade.

* We have proposed a new approach to improv-
ing market conditions in food and other basic com-

PR #450

-1-

Mr. President, Mr. Secretary-General, distinguished colleagues, ladies and gentlemen:

We assemble here this week with an opportunity to improve the condition of mankind. We can let this opportunity slip away, or we can respond to it with vision and common sense.

The United States has made its choice. There are no panaceas available -- only challenges. The proposals that I shall announce today on behalf of President Ford are a program of practical steps, responding to the expressed concerns of developing countries. We have made a major effort to develop an agenda for effective international action; we are prepared in turn to consider the proposals of others. But the United States is committed to a constructive effort.

For some time the technical capacity has existed to provide a tolerable standard of life for the world's four billion people. But we -- the world community -- must shape the political will to do so. For man stands not simply at a plateau of technical ability; he stands at a point of moral choice. When the ancient dream of mankind -- a world without poverty -- becomes a possibility, our profound moral convictions make it also our duty. And the convening of this special session bears witness that economic progress has become a central and urgent concern of international relations.

The global order of colonial power, that lasted through centuries, has now disappeared; the cold war division of the world into two rigid blocs has now also broken down and major changes have taken place in the international economy. We now live in a world of some 150 nations. We live in an environment of continuing conflicts, proliferating weapons, new ideological divisions and economic rivalry. The developing nations have stated their claim for a greater role, for more control over their economic destiny, and for a just share in global prosperity. The economically advanced nations have stated their claim for reliable supplies of energy, raw materials, and other products, at a fair price; they seek stable economic relationships and expanding world trade, for these are important to the well-being of their own societies.

These economic issues have already become the subject of mounting confrontations -- embargoes, cartels, seizures, countermeasures, and bitter rhetoric. Over the remainder of this century, should this trend continue, the division of the planet between north and south, between rich and poor, could become as grim as the darkest days of the cold war. We would enter an age of festering resentment, of increased resort to economic warfare, a hardening of new blocs, the undermining of cooperation, the erosion of international institutions -- and failed development.

PR #450

-2-

We profoundly believe that neither the poor nor the rich nations can achieve their purposes in isolation. Neither can extort them from the other -- the developing countries least of all, for they would pay the greater cost of division of the planet, which would cut them off needlessly from sources of capital and markets essential to their own progress.

The reality is that ample incentives exist for cooperation on the basis of mutual respect. It is not necessarily the case that if some grow worse off, others will be worse off. But there is an opposite proposition, which we believe is true: that an economic system thrives if all who take part in it thrive. This is no theory; it is our own experience. And it is an experience that we, a people uniquely drawn from all the other peoples of the world, truely desire and hope to share with others.

History has left us the legacy of strident nationalism -- discredited in this century by its brutal excesses a generation ago, and by its patent inadequacy for the economic needs of our time. The economy is global. Recessions, inflation, trade relations, monetary stability, gluts and scarcities of products and materials, the growth of trans-national enterprises -- these are international phenomena and call for international responses.

It is also ironic that a philosophy of nonalignment, designed to allow new nations to make their national choices free from the pressure of competing blocs, now has produced a bloc of its own. Nations with radically different economic interests and with entirely different political concerns are combined in a kind of solidarity that often clearly sacrifices practical interests. And it is ironic also that the most devastating blow to economic development in this decade came not from "imperialist rapacity" but from an arbitrary, monopolistic price increase by the cartel of oil exporters.

PR #450

-3-

markets, technological innovation and capital investment of the in-
dustrial countries.

Therefore, the nations assembled here have a choice: we can offer our
people slogans, or we can offer them solutions. We can deal in rhetoric,
or we can deal in reality. My government has made its choice.

-- There must be consensus, first and foremost, on the principle
that our common development goals can be achieved only by cooperation,
not by the politics of confrontation.

-- There must be consensus that acknowledges our respective concerns and our mutual responsibilities. All of us have rights and all of us have duties.

-- The consensus must embrace the broadest possible participation
in international decisions. The developing countries must have a
role and voice in the international system, especially in decisions
that affect them. But those nations who are asked to provide resources
and effort to carry out the decisions must be accorded a commensurate
voice.

We have learned from experience that the methods of development assis-
tance of the 1950s and 60s are no longer adequate. Not only did
the technical accomplishments of many programs fall short of expecta-
tions, the traditional approaches are less acceptable to the industrial-
ized world because they have seemed to become an endless and one-sided
financial burden. And they are less acceptable to the developing
world because they have seemed to create a relationship of charity
and dependency, inconsistent with equality and self-respect.

Therefore, we must find new means. The United States offers today
concrete proposals for international actions to promote economic
development. We believe that an effective development strategy should
concentrate on five fundamental areas:

-- First, we must apply international cooperation to the problem
of ensuring basic economic security. The United States proposes steps
to safeguard against the economic shocks to which developing countries

PR #450

-4-

are particulary vulnerable: sharp declines in their export earnings
from the cycle of world supply and demand, food shortages and natural
disasters.

-- Second, we must lay the foundations for accelerated growth.
The United States proposes steps to improve developing countries'
access to capital markets, to focus and adapt new technology to
specific development needs, and to reach consensus on the conditions
for foreign investment.

-- Third, we must improve the basic opportunities of the develop-
ing countries in the world trading system so they can make their way
by earnings instead of aid.

-- Fourth, we must improve the conditions of trade and invest-
ment in key commodities on which the economies of many developing
countries are dependent, and we must set an example in improving
the production and availability of food.

-- Fifth, let us address the special needs of the poorest
countries, who are the most devastated by current economic
conditions, sharing the responsibility among old and newly wealthy
donors.

The determination of the developing nations to mobilize their own
effort is indispensible. Without it, no outside effort will have
effect. Government policies to call forth savings, to institute land
reform, to use external aid and capital productively, to manage
and allocate national resources wisely, to promote family planning
-- for these there are no substitutes.

We ask in return for a serious international dialogue on the respon-
sibilities which confront us all.

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PR 450

ENSURING ECONOMIC SECURITY

Our first task is to ensure basic economic security.

The swings and shocks of economic adversity are a global concern, tearing
at the fabric of developed and developing nations alike. The cycle of
good times and bad, abundance and famine, does vast damage to lives and
economies. Unemployment, falling standards of living, and the ravages of
inflations, fuel social and political discontent. We have recently seen
the corrosive effects in many countries.

Developing economies are by far the most vulnerable to natural and man-
made disasters, the vagaries of weather and of the business cycle, sharp
increases in the prices of oil and food have a devastating effect on
their livelihood. Recessions in the industrial countries depress their
export earnings.

-- the industrial nations must work together more effectively to
restore and maintain their non-inflationary expansion.

-- Nations which supply vital products must avoid actions which disrupt that expansion, and

-- the international community must undertake a new approach to
reduce drastic fluctuations in the export earnings of the developing
countries.

In a new departure this past year, the leaders of the United States and
its major trading partners have begun closer coordination of their national
economic policies. A shared sense of urgency, and the exchange of
information about trends and intentions, have already influenced important
policy decisions. President Ford intends to continue and intensity con-
sultations of this kind. The successful recovery of the industrial
economies will be the engine of international stability and growth.

Thus the United States has believed that the future of the world economy
requires discussions on energy and other key issues among oil consuming
and producing nations. The Government of France is inviting industrialized
oil producing, and developing nations to re-launch a dialogue this fall

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PR 450

But this dialogue is based on an approach of negotiation and consensus, not the exercise of brute economic power to gain unilateral advantage. The enormous, arbitrary increases in the price of oil of 1973 and 1974 have already exacerbated both inflation and recession worldwide. They have shattered the economic planning and progress of many countries. Another increase would slow down or reverse the recovery and the development of nearly every nation represented in this Assembly. It would erode both the will and the capacity in the industrial world for assistance to developing countries. It would, in short, strike a serious blow at the hopes of hundreds of millions around the world.

The third basic factor in economic security is the stability of export earnings. The development programs -- indeed the basic survival -- of many countries rest heavily on earnings from exports of primary products which are highly vulnerable to fluctuations in worldwide demand. Countries which depend on one product can find their revenues reduced drastically if its price drops or if exports fall precipitously. Most have insufficient reserves to cushion against sharp declines in earnings, and they cannot quickly increase the exports of other products. Facing such economic problems, most cannot borrow to offset the loss, or can only do so at extremely high interest rates. In such situations countries are frequently forced to cut back on the imports on which their growth and survival depend. Thus the unpredictability of export earnings can make a mockery of development planning.

The question of stabilization of income from primary products has become central in the dialogue on international economic concerns. Price stabilization is not generally a promising approach. For many commodities it would be difficult to achieve without severe restrictions on production or exports, extremely expensive buffer stocks, or price levels which could stimulate substitutes and thereby work to the long range disadvantage of producers. Even the most ambitious agenda for addressing individual commodities would not result in stabilization arrangements for all of them in the near term. And focusing exclusively on stabilizing commodity prices would not provide sufficient protection to the many developing countries whose earning also depend on the exports of manufactured goods.

The United States Government has recently completed a review of these issues. We have concluded that, because of the wide diversity among countries, commodities, and markets, a new, much more comprehensive approach is required -- one which will be helpful to exporters of all commodities and manufactured goods as well.

Let me set forth our proposal: The United States proposes creation -- in the International Monetary Fund -- of a new development security

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-- The facility would give loans to sustain development programs in the face of export fluctuations -- up to $2.5 billion, and possibly more, in a single year, and a potential total of $10 billion in outstanding loans.

-- Assistance would be available to all developing countries which need to finance shortfalls in export earnings, unless the shortfalls are caused by their own acts of policy.

-- The poorest countries would be permitted to convert their loans into grants under prescribed conditions. These grants would be financed by the proceeds of sales of IMF gold channeled through the proposed $2 billion trust fund now under negotiation.

-- Eligible countries could draw most, or under certain conditions all of their IMF quotas, in addition to their normal drawing rights. Much of that could be drawn in a single year, if necessary -- part automatically, part subject to balance of payments conditions, and part reserved for cases of particularly violent swings in commodity earnings.

-- Shortfalls would be calculated according to a formula geared to future growth as well as current and past exports. In this way the facility helps countries protect their development plans.

-- This facility would replace the IMF's compensatory finance facility; it would not be available for industrial countries.

The United States will present its detailed proposals to the Board of Directors of the International Monetary Fund this month.

This development security facility would provide unprecedented protection against disruptions caused by reductions in earnings -- both for countries whose exports consist of a few commodities and for those with diversified and manufactured exports whose earnings also fluctuate with business cycles. In the great majority of countries, this new facility will cover nearly all the earnings shortfall.

This new source of funds also reinforces our more traditional types of assistance -- without the stabilization of earnings, the benefits of concessional aid for developing countries is vitiated. For industrialized countries, it means a more steady export market. For developing countries, it helps assure that development can be pursued without disruption and makes them more desirable prospects in international capital markets. For consumers and producers, rich and poor alike, it buttresses economic security.

Thus the success of our efforts in this area will demonstrate that our interdependence can strengthen the foundations of prosperity for all while promoting progress in the developing countries.

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ACCELERATING ECONOMIC GROWTH

It is not enough to ensure the minimal economic security of the develop-
ing countries. Development is a process of growth, of acceleration, of
greater productivity, higher living standards, and social change. This
is a process requiring the infusion of capital, technology, and mana-
gerial skills on a massive scale.

Developing countries themselves will have to provide most of the
effort, but international support is indispensable. Even a moderate
acceleration of recent growth rates will require some $40 billion a year
in outside capital by 1980. The requirement for technological innova-
tion, though impossible to quantify, is similarly great.

Bilateral concessional assistance from the industrialized countries has been one important source. Last year it amounted to some $7.2 billion. This must continue to grow. But realistically, we cannot expect the level to increase significantly over the coming years. To put it frankly, the political climate for bilateral aid has deteriorated. In the industrial countries, support for aid has been eroded by domestic economic slowdown, compounded by energy problems in the developing countries. There is resentment at forms of assistance which imply dependence.

The oil exporters have only begun to meet their responsibility for assis-
tance to the poorer countries. Last year their concessionary aid dis-
bursements were roughly $2 billion; it could -- and must -- rise substan-
tially this year.

-- First, developing countries must have better access to capital markets;

-- second, we must promote the transfer of technology;

-- third, it is time to reach an international consensus on the
principles to guide the beneficial operation of transnational
enterprises.

First, access to capital markets. The private capital markets are already a major
source of development funds, either directly or through intermediaries. The World Bank and

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Several courses of action offer promise. First, the United States will support a major expansion of the resources of the World Bank's International Finance Corporation -- the investment banker with the broadest experience in supporting private enterprise in developing countries. We propose a large increase in the IFC's capital, from the present $100 million to at least $400 million.

Secondly, the United States proposes creation of an International Investment Trust, to mobilize portfolio capital for investment in local enterprises. The trust would attract new capital by offering investors a unique opportunity -- participation in a managed broad selection of investments in developing country firms, public, private and mixed. The International Finance Corporation would manage it and perhaps provide seed capital, but most of its funds would come from government and private investors. Investors would have their exposure to major losses limited by a $200 million loss-reserve, provided by governments of industrialized, oil-producing, and developing nations. This institution could be a powerful link between the capital market and the developing world, and could provide billions of dollars of essential resources.

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First, energy is critical for both agricultural and industrial development. The enormous rise in the cost of oil in the last two years has more than wiped out the total of the foreign aid that developing countries have received. It has undermined their balance of payments and has mortgaged their future by forcing them into larger borrowing at higher interest rates. There is no easy short-term solution, but if energy dependence is to be reduced, efforts to exploit new and diversified sources must be intensified now.

-- The United States invites other nations to join us in an increase of bilateral support for training and technical assistance to help developing countries find and exploit new sources of fossil fuel and other forms of energy.

-- Methods of discovering and using less accessible or low-grade resources must be fully utilized. So must technology to produce solar and geothermal power. And these techniques must be suited to the conditions of the developing countries.

-- The United States believes the topic of energy cooperation should be high on the agenda for the forthcoming dialogue between consumers and producers. We will propose, in this dialogue, creation of an International Energy Institute bringing together developed and developing, consumer and producer, on the particular problem of energy development. The International Energy Agency and the International Atomic Energy Agency should both find ways to give technical assistance and support to this Institute.

-- During the past decade, a number of international agricultural research centers have been established to adapt techniques to local needs and conditions. In 1971 the Consultative Group for International Agricultural Research was formed to coordinate these efforts. The United States is prepared to expand the capacity of these institutes. In collaboration with national research organizations with more skilled manpower and funds, they could grow into a worldwide research network for development of agricultural technology.

-- We are also supporting legislation in the Congress to enable our universities to expand their technical assistance and research in the agricultural field.

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Non-food agricultural and forestry products are a third strategic area for technological assistance. The export earnings of many of the poorest countries -- and the livelihood of many millions of their people -- depend on such products as timber, jute, cotton, and natural rubber, some of which have encountered serious problems in the face of synthetics. They urgently need assistance to improve the productivity and competitiveness of these products and to diversify their economies.

-- The United States therefore proposes creation of an organization to coordinate and finance such assistance. Its task will be to attract manpower and capital for research. The financing of this effort should be a priority task for the new International Fund for Agricultural Development.

-- This is not an easy task. The storehouse of technology is already huge and is growing geometrically. Developing practical devices to transfer technology beyond those which already exist will require careful thought. We are prepared to join with other nations in examining new initiatives.

-- To this end the United States supports creation of an International Industrialization Institute, to sponsor and conduct research on industrial technology together with the governments, industries, and research facilities of developing countries.

-- We support creation of an International Center for the Exchange of Technological Information, as a clearing house for the sharing of ongoing research and new findings relevant to development.

-- We will expand our bilateral support of industrial technology appropriate to developing country needs.

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-- We will work with others in this organization in preparing guidelines for the transfer of technology and in the planning of a conference on science and technology for development.

Access to capital markets, and special programs to transfer new technology, are but two factors of accelerated growth. There is a third -- which may well be one of the most effective engines of development -- the transnational enterprise.

Transnational enterprises have been powerful instruments of modernization both in the industrial nations -- where they conduct most of their operations -- and in the developing countries, where there is often no substitute for their ability to marshall capital, management, skills, technology and initiative. Thus the controversy over their role and conduct is itself an obstacle to economic development.

For our part, the United States is prepared to meet the proper concerns of governments in whose territories transnational enterprises operate. We affirm that enterprises must act in full accordance with the sovereignty of host governments and take full account of their public policy. Countries are entitled to regulate the operations of transnational enterprises within their borders. But countries wishing the benefits of these enterprises should foster the conditions that attract and maintain their productive operation.

The United States therefore believes that the time has come for the international community to articulate standards of conduct for both enterprises and governments. The United Nations Commission on Transnational Corporations, and other international bodies, have begun such an effort. We must reach agreement on balanced principles. These should apply to transnational enterprises in their relations with governments, and to governments in their relations with enterprises and with other governments. They must be fair principles, for failure to reflect the interests of all parties concerned would exacerbate rather than moderate the frictions which have damaged the environment for international investment.

-- Transnational enterprises are obliged to obey local law and refrain from unlawful intervention in the domestic affairs of host countries. Their activities should take account of public policy and national development priorities. They should respect local customs. They should employ qualified local personnel, or qualify local people through training.

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-- Host governments in turn must treat transnational enterprises equitably, without discrimination among them, and in accordance with international law. Host governments should make explicit their development priorities and the standards which transnational enterprises are expected to meet, and maintain them with reasonable consistency.

-- Governments and enterprises must both respect the contractual obligations that they freely undertake. Contracts should be negotiated openly, fairly, and with full knowledge of their implications. Greater assurance that contracts will be honored will improve the international commercial environment, increase the flow of investment, and expand economic transactions. Destructive and politically explosive investment disputes, which spoil the climate for large commitments and investment, will occur less frequently.

-- Principles established for transnational enterprises should apply equally to domestic enterprises, where relevant. Standards should be addressed not only to privately owned corporations, but also to state owned and mixed transnational enterprises, which are increasingly important in the world economy.

A statement of principles is not the only or necessarily a sufficient way of resolving many of the problems affecting transnational enterprises. We must develop others:

-- Governments must harmonize their tax treatment of these enterprises. Without coordination, host-country and home-country policies may inhibit productive investment.

-- Fact-finding and arbitral procedures must be promoted as means for settling investment disputes. The World Bank's International Center for the Settlement of Investment Disputes, and other third-party facilities, should be employed to settle the important disputes which inevitably arise.

-- Laws against restrictive business practices must be developed, better coordinated among countries, and enforced. The United States has long been vigilant against such abuses in domestic trade, mergers, or licensing of technology. We stand by the same principles internationally. We condemn restrictive practices in setting prices or restraining supplies, whether by private or state-owned transnational enterprise or by the collusion of national governments.

-- Insurance for foreign private investors should to the extent possible be multilateralized, and should include financial participation by developing countries to reflect our mutual stake in encouraging foreign investment in the service of development.

-- And there must be more effective bilateral consultation among governments to identify and resolve investment disputes before they become irritants in political relations.

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TRADE AND DEVELOPMENT

Trade has been a driving force in the unprecedented expansion of the world economy over the last thirty years. Comparative advantage and specialization, the exchange of technology and the movement of capital, the spur to productivity that competition provides -- these are central elements of efficiency and progress. Open trade promotes growth and combats inflation in all countries.

But today the global trading system is threatened by the most serious recession since the Second World War. We face the danger of proliferating artificial barriers, and unfair competition reminiscent of the 1930's which contributed to economic and political disaster. Every day that economic recovery is delayed, the temptation grows to restrict imports, subsidize exports, and control scarce commodities. Concerted action is necessary now to safeguard and improve the open trading system on which the future well-being of all our countries depends.

Thus success in the negotiations depends critically on promoting the interests of the developing countries. For if they do not help to make the rules, assume part of the responsibility to maintain a stable trade system and share in the benefits of trade, the rules will be subject to increasing challenge, the stability of the system undermined and the benefits for all nations jeopardized.

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The United States therefore believes that a major goal of the multi-lateral trade negotiations should be to make the trading system better serve development goals. Let me briefly outline our policy.

First, there must be fundamental structural improvement in the relationship of the developing countries to the world trading system. In the earlier stages of their development, they should receive special treatment through a variety of means -- such as preferences, favorable concessions and exceptions which reflect their economic status. But as they progress to a higher level of development, they must gradually accept the same obligations of reciprocity and stable arrangements that other countries undertake. At some point they must be prepared to compete on more equal terms, even as they derive growing benefits.

I am pleased to announce today that the United States program will be put into effect on January 1, 1976. And before that date, we will begin consultations and practical assistance to enable exporting countries to benefit from the new trade opportunities in the American market -- the largest single market for the manufactured goods of developing countries.

Third, in keeping with the Tokyo Declaration, we should adapt rules of non-tariff barriers to the particular situation of developing countries. In setting international standards for government procurement practices, for example, the United States will negotiate special consideration for the developing countries. We will also negotiate on the basis that under prescribed conditions, certain subsidies may be permitted without triggering countervailing duties for a period geared to achieving particular development objectives.

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The developing countries have obligations in return. The world needs a system in which no nation, developed or developing, arbitrarily withholds or interferes with normal exports of materials. This practice -- by depriving other countries of needed goods -- can trigger unemployment, cut production, and fuel inflation. It is therefore as disruptive as any of the other trade barriers I have discussed. We urge negotiations on rules to limit and govern the use of export restraints, a logical extension of existing rules on imports. The United States will join others in negotiating supply access commitments as part of the reciprocal exchange of concessions.

## COMMODITY TRADE AND PRODUCTION

Exports of primary products -- raw materials and other commodities -- are crucial to the incomes of developing countries. These earnings can lift living standards above bare subsistence; generate profits to support the first steps of industrialization; and provide tax revenues for education, health, and other social programs for development. The history of the United States -- and many other countries -- confirms the importance of commodities.

But this path can be precarious in an uncertain global environment. Those developing countries which are not oil exporters rely on primary commodities for nearly two-thirds of their export earnings. Yet their sales of raw materials and agricultural products have not grown as fast as those of industrial countries. Agricultural commodities, particularly, are vulnerable to the whims of weather and swings of worldwide demand. The market in minerals is especially sensitive to the pendulum of boom and bust in the industrial countries. The result is a cycle of scarcity and glut, of under-investment and over-capacity.

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Many solutions have been put forward to benefit producers of particular products -- cartelization, price indexing, commodity agreements and other methods. But reality demonstrates the interdependence of all our economies, and therefore the necessity for approaches that serve global rather than narrow interests.

The United States policy is now one of maximum production. At home, we want a thriving farm economy and moderate prices for consumers. Internationally, we wish cooperative relations with nations that purchase from us, an open and growing market, and abundant supplies to meet the needs of the hungry through both good times and bad.

For hundreds of millions of people, food security is the single most critical need in their lives; for many it is a question of life itself. But food security means more than emergency relief to deal with crop failures, natural disasters and pockets of famine. It means reasonable stability in the availability of food in commercial markets, so that harvest failures in some parts of the world will not make food impossibly expensive elsewhere. We have seen with dramatic frequency in recent years how the international food market, strained to capacity, can shake the international economy. Its fluctuations have accelerated inflation, devastated development plans, and wreaked havoc with human lives. Yet in good times, the world community has not summoned the will to take obvious corrective steps to stabilize the market structure.

The United States believes that a global approach to food security -- which contains elements that can apply to other commodities -- should follow these basic principles:

- The problem must be approached globally, comprehensively, and cooperatively, by consultation and negotiation among all significant producers and consumers;

- producers should recognize the global interest in stability of supply; and consumers should recognize the interest of producers in stability of markets and earnings;

- special consideration should be given to the needs of developing countries; and

- where volatile demand is combined with limited ability to make short-term increases in production, buffer stocks may be the best approach to achieving greater security for both consumers and producers.

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international system of nationally-held grain reserves, to meet emergencies and improve the market. The United States has since then offered specific proposals and begun negotiations. But the international effort lagged when improved harvests seemed to diminish the immediate danger of worldwide shortage. My government today declares that it is time to create this reserve system. If we do not, future crises are inevitable.

Specifically, we propose:

- to meet virtually all potential shortfalls in food grains production, total world reserves must reach at least 30 million tons of wheat and rice. We should consider whether a similar reserve is needed in coarse grains.

- Responsibility for holding reserves should be allocated fairly, taking into account wealth, production and trade. The United States is prepared to hold a major share.

- Acquisition and release of reserves should be governed by quantitative standards such as anticipated surpluses and shortfalls in production.

- Full participants in the system should receive assured access to supplies. Among major producers, full participation should require complete exchange of information and forecasts.

- Special assistance should be extended to developing countries that participate, to enable them to meet their obligation to hold a portion of global reserves.

And let us apply the same approach of cooperation to other primary commodities that are similarly beset by swings of price and supply -- and that are similarly essential to the global economy.

There is no simple formula that will apply equally to all commodities. The United States therefore proposes to discuss new arrangements in individual commodities on a case-by-case basis.

Buffer stocks can be an effective technique to moderate instability in supplies and earnings. On the other hand, price-fixing arrangements distort the market, restrict production, and waste resources for everyone. It is developing countries that can least afford this waste. Restricted production idles the costly equipment and economic infrastructure that takes years to build. Artificially high prices lead consumers to make costly investment in domestic substitutes, ultimately eroding the market power of the traditional producers.

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-- We recommend that a consumer-producer forum be established for every key commodity to discuss how to promote the efficiency, growth, and stability of its market. This is particularly important in the case of grains, as I have outlined. It is also important in copper, where priority should be given to creating a forum for consumer-producer consultation.

-- The first new formal international agreement being concluded is tin. We have participated actively in its negotiation. President Ford has authorized me to announce that the United States intends to sign the tin agreement, subject to Congressional consultations and ratification. We welcome its emphasis on buffer stocks, its avoidance of direct price-fixing, and its balanced voting system. We will retain our right to sell from our strategic stockpiles, and we recognize the right of others to maintain a similar program.

-- We are participating actively in negotiations on coffee. We hope they will result in a satisfactory new agreement that reduces the large fluctuations in prices and supplies entering the market.

-- We will also join in the forthcoming cocoa and sugar negotiations. Their objective will be to reduce the risks of investment and moderate the swings in prices and supplies.

-- We will support liberalization of the International Monetary Fund's financing of buffer stocks, to assure that this facility is available without reducing other drawing rights.

I have already announced my government's broad proposal of a development security facility -- a more fundamental approach to stabilizing the overall earnings of countries dependent on commodities trade. My government also believes that an effective approach to the commodities problem requires a comprehensive program of investment to expand world-wide capacity in minerals and other critical raw materials. This is basic to the health of both industrial and developing economies.

There are presently no shortages in most basic raw materials; nor are any likely in the next two or three years. But the adequacy of supplies in years to come will be determined by investment decisions taken now. Because the technology for processing lower-grade ores is extremely complex, and the financing requirements for major raw material investments are massive, new projects take several years to complete. In some countries, the traditional source of funds -- private foreign investment -- is no longer as welcome, nor are investors as interested, as in the past.

The United States therefore proposes a major new international effort to expand raw material resources in developing countries.

The World Bank and its affiliates, in concert with private sources, should play a fundamental role. They can supply limited amounts of capital directly; more importantly, they can use their technical, managerial and financial expertise to bring together funds from private and public sources. They can act as intermediary between private investors

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and host governments, and link private and public effort by providing cross guarantees on performance. World Bank loans could fund government projects, particularly for needed infrastructure, while the International Finance Corporation could join private enterprise in providing loans and equity capital. The World Bank group should aim to mobilize $2 billion in private and public capital annually.

In addition, the United States will contribute to and actively support the new United Nations revolving fund for natural resources. This Fund will encourage the worldwide exploration and exploitation of minerals, and thus promote one of the most promising endeavors of economic development.

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THE POOREST NATIONS

Any strategy for development must devote special attention to the needs of the poorest countries.

The fate of one billion people -- half the developing world and a quarter of mankind -- will be affected by what we do or fail to do.

For the last four years, per capita income in the poorest countries -- already below minimal standards for development -- has declined. Their exports are most concentrated in the least dynamic sectors of world demand. It is they who have been most cruelly affected by the rise in the costs of oil, food and other essential imports.

First, security means balance of payments support for the poorest countries during periods of adversity. For them global recessions and wide swings in prices of key commodities have a particularly disastrous impact. Yet these countries have very little access to short and medium-term capital to help them weather bad times. The little finance to which they have access often involves interest rates that are too high considering their chronic debt repayment problems.

To provide greater balance of payments support at more acceptable rates of interest for the poor nations, the United States last November proposed a trust in the International Monetary Fund of up to $2 billion for emergency relief. Although this proposal met with wide support, it has been stalled by a dispute over an unrelated issue -- the role of gold in the international monetary system. We cannot let this delay continue. The United States is making a determined effort to move forward the monetary negotiations at the IMF meetings now underway. If others meet us in this same spirit, we could reach a consensus on the Trust Fund by the next meeting in January.

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-- The World Food Conference set a target of 10 million tons of food aid annually. This fiscal year the United States food aid budget provides for almost 6 million tons of food-grains -- sixty percent of the world target, and a twenty percent increase over last year. Other producers must also provide their share.

-- Another priority in the poorest countries must be to reduce the tragic waste of losses after harvest from inadequate storage, transport, and pest control. There are often simple and inexpensive techniques to resolve these problems. Investment in such areas as better storage and pesticides could have a rapid and substantial impact on the world's food supply -- indeed the saving could match the total of all the food aid being given around the world. Therefore, we urge that the Food and Agricultural Organization, in conjunction with the UN Development Program and the World Bank, set a goal of cutting in half these post-harvest losses by 1985, and develop a comprehensive program to this end.

Finally, security means good health and easing the strains of population growth. Disease ravages the poorest countries most of all and exacts a devastating economic as well as human cost. At the same time we face the stark reality that there will be twice as many people to feed by the end of this century as there are today. One of the most promising approaches to these problems is the integrated delivery of basic health services at the community level, combining medical treatment, family planning, and nutritional information and using locally trained paramedical personnel. The United States will support a major expansion of the efforts already underway, including those in cooperation with the World Health Organization, to develop and apply these methods. We strongly urge the help of all concerned nations.

This means first of all that they should have preferential access to official, concessionary financial aid. They have the least dynamic exports, but they lack the capital to develop new ones. They have the direst need for financing, but they have no access to capital markets and little ability to carry greater debt.

If these countries themselves can summon the effort required, outside assistance can be productive. All nations with the financial capacity must share the responsibility. We will do our part. More than seventy percent of our development assistance goes to low-income countries. More than sixty percent of this year's proposed programs is devoted to food and nutrition, which are of particular importance to the poorest.

The special financial needs of the poorest countries can be met, particularly by expanded, low-interest loans of the international financial institutions. The International Development Association of the World

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Bank group is a principal instrument whose great potential has not been fully realized. After Congressional consultations, the United States will join others in a substantial fifth replenishment of the resources of the International Development Association; provided that the oil exporting countries also make a significant contribution.

Traditional bilateral aid programs to boost agricultural production remain indispensable. President Ford is asking Congress for authorization to double our bilateral agricultural assistance this year to $582 million. We urge the other affluent nations to increase their contributions as well.

Clearly a massive program of international cooperation is also required. More research is needed to improve agricultural yields, make more efficient use of fertilizer, and find better farm management techniques. Technical assistance and information exchange are needed for training and for technological advance. Better systems of water control, transportation and land management are needed to tap the developing countries' vast reserves of land, water and manpower.

To mobilize massive new concessional resources for these purposes, the United States proposes the early establishment of the new International Fund for Agricultural Development. President Ford has asked me to announce that he will seek authorization of a direct contribution of $200 million to the fund -- provided that others will add their support for a combined goal of at least one billion dollars.

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THE POLITICAL DIMENSION

In every area of endeavor that I have described -- economic security, growth, trade, commodities and the needs of the poorest -- the developing countries themselves want greater influence over the decisions that will affect their future. They are pressing for a greater role in the institutions and negotiations by which the world economic system is evolving.

**The process of decision should be fair.** No country or group of countries should have exclusive power in the areas basic to the welfare of others. This principle is valid for oil. It also applies to trade and finance.

**The process of decision should be responsive to change.** On many issues developing countries have not had a voice that reflects their role. This is now changing. It is already the guiding principle of two of the most successful international bodies, the IMF and the World Bank, where the quotas of oil producing states will soon be at least doubled -- on the basis of objective criteria. Basic economic realities, such as the size of economies, participation in world trade and financial contributions, must carry great weight.

We can usefully employ many different institutions and procedures: sometimes we should seek broad consensus in universal bodies, as we are doing this week in this Assembly; sometimes negotiations can more usefully be focused in more limited forums, such as the forthcoming consumer-producer dialogue; sometimes decisions are best handled in large, specialized bodies such as the IMF and World Bank, where voting power is related to responsibility; and sometimes most effective action can be taken in regional bodies.

Most relevant to our discussion here is the improvement of the United Nations system, so that it can fulfill its charter mandate "to employ international machinery for the promotion of the economic and social advancement of all peoples." We welcome the thoughtful report by the Secretary-General's group of 25 experts on structural reform in the UN system. We will seriously consider its recommendations. In our view, an improved UN organization must include:

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-- rationalization of the UN's fragmented assistance programs;

-- strengthened leadership within the central Secretariat and the entire UN system for development and economic cooperation;

-- streamlining of the Economic and Social Council;

-- better consultative procedures to ensure effective agreement among members with a particular interest in a subject under consideration; and

-- a mechanism for independent evaluation of the implementation of programs.

The United States proposes that 1976 be dedicated as a year of review and reform of the entire UN development system. An intergovernmental committee should be formed at this session, to begin work immediately on recommendations that can be implemented by the General Assembly in its 1976 session. We consider this a priority in any strategy for development.

## CONCLUSION

Mr. President, Mr. Secretary-General, colleagues, ladies and gentlemen:

I began today with the statement that we have, this week, an opportunity to improve the condition of mankind. This fact alone represents an extraordinary change in the human condition. Throughout history, man's imagination has been limited by his circumstances -- which have now fundamentally changed. We are no longer confined to what Marx called "the realm of necessity." And it has always been the case that the wisest realists were those who understood man's power to shape his own reality.

The steps we take now are not limited by our technical possibilities, but only by our political will. If the advanced nations fail to respond to the winds of change, and if the developing countries choose rhetoric over reality, the great goal of economic development will be submerged in our common failure. The speeches made here this week will be placed alongside many other lofty pronouncements made over decades past in this organization on this subject, buried in the archives of oblivion.

-- We have proposed steps to improve basic economic security -- to safeguard the world economy, and particularly the developing countries, against the cruel cycles that undermine their export earnings.

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-- We have proposed measures to improve developing countries'
access to capital, new technology, and management skills to lift
themselves from stagnation onto the path of accelerating growth.

-- We have proposed structural improvements in the world trading
system, to be addressed in the ongoing multilateral trade negotiations,
to enhance developing countries' opportunities to earn their own way
through trade.

-- We have proposed a new approach to improving market conditions
in food and other basic commodities, on which the economies and indeed
the lives of hundreds of millions of people depend.

-- We have proposed specific ways of giving special help to the
development needs of the poorest countries.

My Government does not offer these proposals as an act of charity, nor
should they be received as if due. We know that the world economy
nourishes us all, we know that we live on a shrinking planet.
Materially as well as morally, our destinies are intertwined.

There remain enormous things for us to do. We can say once more to
the new nations: we have heard your voices. We embrace your hopes.
We will join your efforts. We commit ourselves to our common success.

* * * * *

Global Consensus and Economic Development

Text of Address by Secretary Kissinger ¹

We assemble here this week with an oppor-
tunity to improve the condition of mankind.
We can let this opportunity slip away, or
we can respond to it with vision and common
sense.

The United States has made its choice.
There are no panaceas available—only chal-
lenges. The proposals that I shall announce
today on behalf of President Ford are a pro-
gram of practical steps responding to the
expressed concerns of developing countries.
We have made a major effort to develop an
agenda for effective international action; we
are prepared in turn to consider the pro-
posals of others. But the United States is
committed to a constructive effort.

For some time the technical capacity has
existed to provide a tolerable standard of life
for the world's 4 billion people. But we,
the world community, must shape the politi-
cal will to do so. For man stands not simply
at a plateau of technical ability; he stands at
a point of moral choice. When the ancient
dream of mankind—a world without poverty
—becomes a possibility, our profound moral
convictions make it also our duty. And the
convening of this special session bears wit-
ness that economic progress has become a
central and urgent concern of international
relations.

The global order of colonial power that
lasted through centuries has now disap-
peared; the cold war division of the world
into two rigid blocs has now also broken

down, and major changes have taken place
in the international economy. We now live
in a world of some 150 nations. We live in
an environment of continuing conflicts, pro-
liferating weapons, new ideological divisions
and economic rivalry. The developing na-
tions have stated their claim for a greater
role, for more control over their economic
destiny, and for a just share in global pros-
perity. The economically advanced nations
have stated their claim for reliable supplies
of energy, raw materials, and other products
at a fair price; they seek stable economic re-
lationships and expanding world trade, for
these are important to the well-being of their
own societies.

These economic issues have already be-
come the subject of mounting confrontation
—embargoes, cartels, seizures, countermeas-
ures—and bitter rhetoric. Over the remain-
der of this century, should this trend con-
tinue, the division of the planet between
North and South, between rich and poor,
could become as grim as the darkest days
of the cold war. We would enter an age of
festering resentment, increased resort to eco-
nomic warfare, a hardening of new blocs, the
undermining of cooperation, the erosion of
international institutions—and failed devel-
opment.

¹ Read before the seventh special session of the U.N. General Assembly on Sept. 1 by Daniel P. Moynihan, U.S. Representative to the United Nations (text from press release 450).

September 22, 1975

425

The reality is that ample incentives exist for cooperation on the basis of mutual respect. It is not necessarily the case that if some grow worse off, others will be worse off. But there is an opposite proposition, which we believe is true: that an economic system thrives if all who take part in it thrive. This is no theory; it is our own experience. And it is an experience that we, a people uniquely drawn from all the other peoples of the world, truly desire and hope to share with others.

History has left us the legacy of strident nationalism—discredited in this century by its brutal excesses a generation ago and by its patent inadequacy for the economic needs of our time. The economy is global. Recessions, inflation, trade relations, monetary stability, gluts and scarcitys of products and materials, the growth of transnational enterprises—these are international phenomena and call for international responses.

History has also left us discredited doctrines of economic determinism and struggle. One of the ironies of our time is that systems based on the doctrine of materialism that promised economic justice have lagged in raising economic welfare.

It is also ironic that a philosophy of nonalignment, designed to allow new nations to make their national choices free from the pressure of competing blocs, now has produced a bloc of its own. Nations with radi>cally different economic interests and with entirely different political concerns are combined in a kind of solidarity that often clear-

Therefore the nations assembled here have a choice: We can offer our people slogans, or we can offer them solutions. We can deal in rhetoric, or we can deal in reality. My government has made its choice.

So let us get down to business. Let us put aside the sterile debate over whether a new economic order is required or whether the old economic order is adequate. Let us look forward and shape the world before us. Change is inherent in what we do and what we seek. But one fact does not change: that without a consensus on the realities and principles of the development effort, we will achieve nothing.

—There must be consensus, first and foremost, on the principle that our common development goals can be achieved only by cooperation, not by the politics of confrontation.

—There must be consensus that acknowledges our respective concerns and our mutual responsibilities. All of us have rights, and all of us have duties.

—The consensus must embrace the broadest possible participation in international decisions. The developing countries must have a role and voice in the international system, especially in decisions that affect them. But those nations who are asked to provide resources and effort to carry out the decisions must be accorded a commensurate voice.

426

Department of State Bulletin

We have learned from experience that the methods of development assistance of the 1950's and 60's are no longer adequate. Not only did the technical accomplishments of many programs fall short of expectations; the traditional approaches are less acceptable to the industrialized world because they have seemed to become an endless and one-sided financial burden. And they are less acceptable to the developing world because they have seemed to create a relationship of charity and dependency, inconsistent with equality and self-respect.

- First, we must apply international co-operation to the problem of insuring basic economic security. The United States proposes steps to safeguard against the economic shocks to which developing countries are particularly vulnerable: sharp declines in their export earnings from the cycle of world supply and demand, food shortages, and natural disasters.

- Third, we must improve the basic opportunities of the developing countries in the world trading system so they can make their way by earnings instead of aid.

- Fourth, we must improve the conditions of trade and investment in key commodities on which the economies of many developing countries are dependent, and we must set an example in improving the production and availability of food.

The determination of the developing na-

But there must be international as well as national commitment. The United States is prepared to do its part. The senior economic officials of our government have joined with me in developing our approach. Treasury Secretary Simon, with whom I have worked closely on our program, will discuss it tomorrow in relation to the world economy. The large congressional delegation that will attend the session, and the seriousness with which they and the executive branch have collaborated in preparing these proposals, are evidence of my country's commitment.

## Insuring Economic Security

The swings and shocks of economic adversity are a global concern tearing at the fabric of developed and developing nations alike. The cycle of good times and bad, abundance and famine, does vast damage to lives and economies. Unemployment, falling standards of living, and the ravages of inflation fuel social and political discontent. We have recently seen the corrosive effects in many countries.

Developing economies are by far the most vulnerable to natural and manmade disasters —the vagaries of weather and of the business cycle. Sharp increases in the prices of oil and food have a devastating effect on their livelihood. Recessions in the industrial countries depress their export earnings.

September 22, 1975

427

THE CHAIRMAN: The Committee will please come to

order.

We meet this morning to hear a report from The Honorable Henry A. Kissinger, Secretary of State, on his recent Middle East negotiations. The Secretary has informed the Committee that some of the information he wishes to discuss is very sensitive and will require an executive session. If it is agreeable with the Committee, and because time is short, we will hear the Secretary's opening statement and then will go into executive session.

Under the rules of the Committee and the Rules of the House, the Chairman at this time will entertain a motion that the Committee go into executive session after the Secretary completes his opening statement.

[It was regularly moved, seconded, put to a roll-call vote and carried, 19 in favor, to move into executive session after the Secretary's opening statement.]

THE CHAIRMAN: This motion is adopted.

There are ... the Secretary has been tantamount to a lead to a fair and peaceful settlement among the parties in the Near East conflict.

However, as you well know, several questions have

3

since the days of President Truman. And this fact, alone, has involved the United States in the diplomacy and in the conflict of the Middle East for all of the postwar period.

The Middle East War of 1973 brought home to all Americans that a conflict in the Middle East carries with it the risk of nuclear confrontation, and also that a conflict in the Middle East can affect the lives of all Americans because the pressures of the oil producing states contributed to the most severe recession that the United States has experienced in thirty years.

And both the safety and the well being of all Americans are intimately affected by events in the Middle East and therefore it is a vital American interest to end to the extent that we can, the tensions that have characterized the Middle East for a generation that have produced four wars, each of which involved the risk of great powers confrontation; and the last of which also involves severe economic dislocation for all of the industrialized nations.

This is why the United States, since October 1973, has been engaged actively to promote a peaceful solution to the conflict in the Middle East, and why the United States has played an active role in the conduct of the negotiations

4

We did this, I repeat, not out of a desire to be involved, but because of the fact that we were involved and we did this in order to protect the lives and the economic wellbeing of Americans.

In conducting this negotiation and in the approach to the negotiations, we had before us two broad approaches:

One was the attempt to solve all problems in one grand negotiation involving all of the parties and all interested outside participants.

Or else, to proceed, step-by-step in terms of what was feasible at any given moment.

The first approach is intellectually very appealing. It has, however, the disadvantage that it attempts to solve simultaneously problems, any one of which has defied solutions for over a generation -- the problem of the final frontiers of Israel -- the problem of the reciprocal guarantees of peace to be given by the Arab countries -- the problem of guarantees -- the problem of Palestinians -- the problem of Jerusalem -- and the problem of the entire international context into which such an agreement should be invented.

And therefore, it was our judgment that an attempt at such a global solution immediately would lead rapidly to

5

a stalemate; and that this stalemate would, in turn, lead sooner or later to a military confrontation of the kind which it has been our purpose to avoid.

We, therefore, pursued a policy of settling those issues that the parties were prepared to settle -- in order to create a climate of confidence -- so that the parties could contribute toward the process of peace -- so that the hatreds and distrust that had built up over a generation could gradually be dissipated with the hope that these steps could gradually become larger.

Sooner or later, this procedure was certain to merge, and was intended to merge, into an overall settlement. And I want to say now that the United States has never considered any one step as the "final" step.

This Agreement that has just been concluded between Egypt and Israel is not considered -- by either of the parties or by the United States -- as a "final" settlement. Indeed, it is so stated in the Agreement that it is not a "final" settlement and that negotiations have to continue.

Nor do we believe that a final settlement can be achieved between only two of the parties. Eventually, all of the parties to the conflict will have to be involved in the

6

process of negotiations and in the final solution.

We proceeded in the negotiations between Egypt and Israel, despite the disappointment of the collapse of the negotiations in March, because -- as the parties looked at the prospect of an overall approach, it seemed the only alternative in April and May -- they realized that an agreement between Egypt and Israel might unlock the door toward peace in the Middle East -- while a failure of that negotiation would create a spirit of hopelessness and despair and might be even a military conflict.

It was with this attitude that President Ford, after discussions with President Sadat and Prime Minister Rabin -- and after essential deliberations in the National Security Council and other advisories -- decided once again to encourage a negotiation between Egypt and Israel -- a negotiation which both parties had asked us to undertake.

And this is the background that led to the most recent negotiations that concluded with an Agreement between Israel and Egypt about the deployment of Israeli forces in the Sinai and about Egyptian commitments to a peaceful solution of the Middle East conflict.

Now let me talk about the negotiations and the

7

American role in them.

First, let me talk about what was involved in the negotiations:

After the Disengagement Agreement between Israel and Egypt and Israel and Syria, there was a hiatus in the negotiating process caused in part because negotiations for the first time in the history of the Middle East conflict were being conducted -- not to settle the immediate aftermath of the war -- not under the immediate impact of military operations -- but they were being conducted in order to bring about a more stable and a more peaceful approach to the problem of the Middle East.

The negotiations between Egypt and Israel were the macrocosm of the larger negotiations that will have to take place eventually. Because the great problem in the Middle East is how to match the tangible concessions that Israel has to make in giving up territory -- against the intangible concessions that have to be made on the Arab side, when the commitments to peace in the recognition of, or acceptance of a peaceful process and in the ultimate recognition of the State of Israel.

How to balance these requirements for both sides

8

because the principal task of the negotiations.

Both sides made a serious effort. Both sides recognized that the failure of the negotiations might leave the Middle East mired in hopelessness and lead to a highly explosive situation.

An approved [too deep] of intended negotiations and an agreement was worked out which balanced the requirements of Israel against the necessity of Egypt, and which at a minimum has given a period of respite and which ... with wisdom and good fortune, might open the door towards peace in the Middle East.

Now let me explain the provisions of the Agreement and then I will discuss the origin of the American presence which is being discussed -- and some other general considerations.

Could somebody put up the map?

...

Mr. Chairman this is the situation as it was at the beginning of the negotiations. The Egyptian line was about 10 kilometers from the Suez Canal.

The Israeli line was about 20 kilometers from the Suez Canal -- so that there was that limited armaments

KISSINGER

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It would be foolhardy, however, to terminate the UN Command without new arrangements to preserve the integrity of the Armistice Agreement. In the interest of peace, the United States cannot accept any solution which fails to provide for the continuing validity of the Armistice Agreement.

The Republic of Korea and the United States have stated their general readiness to meet with representatives of the other side and with other members of the Security Council to discuss termination of the UN Command while preserving the Armistice Agreement.

Today I can be more specific. The United States and the Republic of Korea, looking forward to the time when a lasting solution of the Korean problem can be achieved, are herewith proposing to the parties of the Armistice the convening of a conference to discuss ways to preserve the Armistice Agreement. At such a meeting, we would also be prepared to explore other measures to reduce tension on the Korean peninsula, including the possibility of a larger conference to negotiate a more fundamental arrangement.

It would be in keeping with this spirit of dialogue for this body to open its doors to full membership for the two Korean Governments. The United States supports the dual entry of both South and North Korea into the United Nations without prejudice to their eventual reunification. For our part, if North Korea and its allies would move to improve their relations with the Republic of Korea, we would be prepared to take similar reciprocal actions.

It goes without saying that no proposal for security arrangements on the Korean peninsula which attempts to exclude the Republic of Korea from the discussions can be accepted by the United States.

The United Nations can contribute significantly to the process of peace on the Korean peninsula by supporting a responsible approach.

Over the past year the United States has followed carefully and with great sympathy the efforts to reach peaceful settlements in Southern Africa.

We welcome the statesmanlike efforts of both black and white African leaders who are seeking to prevent violence and bloodshed and to promote a negotiated settlement in Rhodesia. The differences between the two communities in that country while substantial, have been narrowed significantly in the last decade. Both sides in Rhodesia, and Rhodesia's neighbors black and white, have an interest in averting civil war. We will support all efforts to bring about a peaceful settlement.

In underlining our goal of peaceful change for Southern Africa, I want to emphasize the importance of an early settlement in Namibia. My government's opposition to South Africa's continuing occupation of Namibia and our rejection of South Africa's apartheid system are well known. The United States has consistently conveyed our position on this subject to South Africa. We will continue to do so.

-more-

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-10-

We believe that the people of Namibia should be given the opportunity within a short time to express their views on the political future and constitutional structure of their country, freely and under UN supervision.

## BUILDING INTERNATIONAL SECURITY

Peace in the world will be fragile and tenuous without a curb and eventually an end of the arms race. This is why the United States has embarked, with the Soviet Union, upon the difficult and complex negotiation to limit strategic arms. Our objectives are to prevent unchecked destabilizing competition in strategic armaments; to achieve reduction of these arms; to lessen further the likelihood of hasty decisions in time of crisis; and to ease the economic burden of the nuclear arms race.

The Vladivostok accord of last fall marked a major step toward achieving these goals. When the agreement in principle is translated into a treaty, agreed ceilings will be placed on strategic force levels for a ten-year period. This unprecedented step will slow the pace of new arms programs especially those driven by fear of major deployments by the other side. And it will enhance prospects for international stability and for political accommodation in other areas.

The United States is actively engaged in other arms control negotiations. Together with the Soviet Union, we have made progress toward establishing a regime for peaceful nuclear explosions. And we have agreed to set a threshold on the underground testing of nuclear weapons. These are significant steps toward a verifiable comprehensive test ban.

In addition, the United States and the USSR have presented to the Conference of the Committee on Disarmament texts of a Convention on the Prohibition of Military or Any Other Hostile Use of Environmental Modification Techniques. These techniques are still at a primitive stage of development, but man's mastery of environmental forces continues to advance. Misuse of this knowledge might open new avenues of military competition and wreak untold and irreversible harm upon all humanity. We urge the Conference to complete its consideration rapidly.

Another urgent task is a substantial reduction in the high levels of military forces now confronting each other in various parts of the world. The United States believes that the time has come to give new impetus to the negotiations on mutual and balanced force reductions in Central Europe. The significance of the Conference on Security and Cooperation in Europe depends importantly on whether we can achieve progress in this area. An agreement that enhances mutual security in Central Europe is feasible and essential. We will work toward this goal.

The world faces a paradox with respect to the proliferation of nuclear energy. Men have fashioned from the atom weapons which can in minutes end the civilization of centuries. Simultaneously, the atom is fast becoming a more and more essential source of energy. It is clear that the cost and eventual scarcity of oil and other fossil fuel will increasingly spread nuclear power around the world in the decades ahead.

-more-

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But the spreading of nuclear power poses starkly the danger of pro-liferating nuclear weapons capabilities -- and the related risks of the theft of nuclear materials, blackmail by terrorists, accidents or the injection of the nuclear threat into regional political conflicts. Now is the time to act. If we fail to restrain nuclear proliferation future generations will live on a planet shadowed by nuclear catastrophe.

Over the past year, the United States has repeatedly urged new efforts among the supplier states to strengthen and standardize safeguards and controls on export of nuclear materials. We must not allow these safeguards to be eroded by commercial competition. We must ensure the broad availability of peaceful nuclear energy under safe, economical and reliable conditions.

The United States has intensified its efforts within the International Atomic Energy Agency and with other nations to broaden and strengthen international standards and safeguards and has proposed an international convention setting standards to protect the physical security of nuclear materials in use, storage or transfer.

The United States continues to urge the widest possible adherence to the Non-Proliferation Treaty and the associated safeguard measures of the IAEA.

The greatest single danger of unrestrained nuclear proliferation resides in the spread under national control of reprocessing facilities for the atomic materials in nuclear power plants. The United States therefore proposes -- as a major step to reinforce all other measures -- the establishment of multinational regional nuclear fuel cycle centers. These centers would serve energy needs on a commercially sound basis and encourage regional energy cooperation. Their existence would reduce the incentive for small and inefficient reprocessing facilities, limit the possibility of diverting peaceful nuclear materials to national military use, and create a better framework for applying effective international safeguards.

We urge that groups of nations begin now to explore this concept and that all states support the IAEA's work in this field.

## BUILDING ECONOMIC WELLBEING

In the last two years, the world community has been reminded dramatically to what extent economic relations are an essential foundation of the international order. Economic conditions not only underpin every society's ability to achieve its national goals, but all national economies are sustained by the global economic system. The conduct of our economic affairs will therefore determine to an extraordinary degree whether our political relations will be based on cooperation or conflict.

It would be one of history's most tragic ironies if, at a time when we are putting behind us the tensions of the Cold War, we were to enter a new period of conflict between North and South, rich and poor. At the recently concluded Special Session, the United States called for an end to the sterile confrontation of the past. We stated that when the ancient dream of mankind -- a world without poverty -- becomes a possibility, our moral convictions also make it a duty. And we emphasized that only cooperation -- not extortion -- can achieve this goal.

-more-

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The Special Session gives us ground for hope that--at least for the immediate future--a choice has been made to turn away from confrontation toward cooperation. The United States is proud to support the final document which is the product of the arduous effort and dedication of so many in this Chamber.

The United States considers the achievements of the Special Session a beginning, not an end. As recommended by the final report, we must now move forward in available forums to give reality and content to the objectives on which we have agreed. In the difficult negotiations ahead, my government will participate energetically, in a cooperative and conciliatory spirit.

## BUILDING FOR JUSTICE

Beyond peace, security, and prosperity, lies a deeper universal aspiration for dignity and equal opportunity. Mankind will never be spared all the tragedies inherent in the cycle of life and death. But we do have it in our power to eliminate or ease the burden of social tragedy and of organized injustice.

The United States has therefore traditionally been an advocate of extending the reach of international law in international affairs. We have offered our help to the victims of disease and natural disaster. We have been a champion of liberty and a beacon to the oppressed. There is no longer any dispute that international human rights are on the agenda of international diplomacy.

The reach of international law must extend to the last frontiers of our planet, the oceans. They are the common heritage of mankind, but they can turn into arenas of conflict unless governed by law. They hold untapped sources of energy, minerals and protein; their environmental integrity is crucial to our survival.

The United States welcomed the United Nations mandate for a comprehensive treaty governing the use of the oceans and their resources. Last month in Montreal I set forth our approach to this negotiation and urged that next year's session of the Law of the Sea Conference move matters to a rapid and successful conclusion. No international negotiation is more vital for long-term political and economic stability and the prosperity of our globe.

International law must also come to grips with international terrorism. Innumerable innocent lives have been lost as a consequence of the lack of internationally accepted standards specifically designed to avert unlawful and dangerous interference with civil aviation. The hijacking of aircraft, the kidnapping and murder of innocent civilian victims for presumed political gain remain a plague on civilized man. This remains one of the underdeveloped areas of international law which merits most urgent attention of this Organization.

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Compassion for our fellow men requires that we mobilize inter-national resources to combat the age-old scourges of mankind--disease, famine, and natural disaster. We are pleased that a concerted effort has been undertaken by the World Health Organization and interested governments, in response to our initiative at the last General Assembly, to control schistosomiasis, a disease which afflicts and debilitates over 200 million people in 70 countries, and imposes a great human and economic cost.

The great human rights must be recognized, respected, and given reality in the affairs of nations. The earliest UN declarations, and the recent Helsinki Conference, leave no doubt that these are matters of international concern. The United States will support these principles. Throughout the world, in all continents, violations of human rights must be opposed whether they are inflicted by one race upon another--or upon members of the same race. Human rights must be cherished regardless of race, sex or religion. There can be no double standard.

The UN Human Rights Commission has taken its first steps against gross violations of human rights where serious and reliable allegations are submitted by individuals. We support these steps. The organized concern of the world community can be a potent weapon in the war against degradation of human values.

One of the most persistent and serious problems is torture, a practice which all nations should abhor. It is an absolute debasement of the function of government when its overwhelming power is used, not for people's welfare but as an instrument of their suffering.

The United States urges this Assembly to adopt the declaration of the recent world congress on this issue in Geneva. In addition, we propose that this General Assembly establish a group of experts, to be appointed by the Secretary General, to study the nature and extent of torture in the world today and to report back to the next Assembly.

Mr. President,

This Organization was created in the belief that the universality of the human race can be reflected in the conduct of international affairs. This Chamber symbolizes the hope that mankind places in the force of nations working together in the common interest, with reason, responsibility and mutual respect.

The problems we face are complex and perilous. The sterile slogans of yesterday, the solutions of the past, the dwelling upon old resentments can only widen the gaps between us and allow the dangers to peace and the wellbeing of our peoples to fester and grow.

We have it in our power to prove to future generations that the last quarter of the Twentieth Century was not an era of violence and conflict, but one of the creative epochs of world history.

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My country's history, Mr. President, tells us that it is
possible to fashion unity while cherishing diversity; that
common action is possible despite the variety of races, interests
and beliefs we see here in this Chamber. Progress and peace and
justice are attainable.

So we say to all peoples and governments: Let us fashion
together a new world order. Let its arrangements be just. Let
the new nations help shape it and feel it is theirs. Let the
old nations use their strengths and skills for the benefit of
all mankind. Let us all work together to enrich the spirit and
to ennoble mankind.

* * * * * * * *

PR #496

Mr. President, Mr. Secretary-General, distinguished delegates, ladies and gentlemen:

At the outset, let me say how pleased we are that our deliberations this year take place under the Presidency of the distinguished Prime Minister of Luxembourg. His contribution to European cooperation, his diplomatic skills, his dedication to democracy give us confidence that this 30th session will be marked by a constructive and creative spirit.

And I want also to pay tribute to the distinguished Secretary-General whose fairness, leadership, and tireless effort are dedicated to carrying this Organization forward into a new era of cooperation for world peace.

This century has seen war and cataclysm on an unprecedented scale. It has witnessed the breakdown of established patterns of order and practices of international conduct. It has suffered global economic depression and cycles of famine. It has experienced the birth of thermonuclear weapons, and the proliferation of armaments around the planet. Ours is a world of continuing turmoil and ideological division.

But this century has also seen the triumph of the principle of self-determination and national independence. A truly global community has begun to evolve, reflected in a multitude of institutions of international cooperation. We have shaped new methods of peaceful settlement, arms limitation, and new institutions to promote economic development and to combat hunger and disease worldwide. And our very presence here signifies the hope of all nations that disputes and conflicts can be resolved by cooperative means.

As we deliberate the future, an event of potentially vast implication has just been achieved in this Organization: the unanimous agreement produced by the Seventh Special Session of the General Assembly on measures to improve the economic condition of mankind.

Despite differences of ideology and approaches to economic development, the nations assembled here began the move towards the recognition that our interdependence spells either common progress or common disaster; that in our age no nation or group of nations can achieve its aims by pressure or confrontation and that the attempt to do so would damage everyone. They agreed to transcend the stereotypes of the past in the search for a cooperative future. The Special Session forged a sense of common purpose based on the equality and cooperation of states. Now we must dedicate ourselves to implement this consensus.

Let us carry forward the spirit of conciliation into the deliberations of this Regular Session. Let us address the issues of world peace -- the foundation of all else we do on this planet -- with this same consciousness of our common destiny.

PR

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It is our common duty to avoid empty slogans and endless recrimination. We must instead sustain, strengthen and extend the international environment we and our posterity will require for the maintenance of peace and the furtherance of progress.

Only in a structure of cooperation, can disputes be settled and clashes contained. Only in an atmosphere of conciliation, can the insecurity of nations, out of which so much conflict arises, be eased, and habits of compromise and accommodation be nurtured. Social progress, justice and human rights can thrive only in an atmosphere of reduced international tension.

The United States stands ready to dedicate itself to cooperative efforts to harmonize the different perspectives of the world community in creating a new sense of security and well-being. We do so not out of fear, for we are better able to sustain ourselves in situations of confrontation than most other nations. Nor do we do so out of a sense of guilt, for we believe that we have on the whole used our power for constructive ends.

We affirm our common destiny because of our recognition of global interdependence and because global peace requires it. Indeed there is no realistic alternative to shared responsibility in dealing with the international agenda of peace, security, economic well-being and justice.

Let me set forth the views of the United States on the work we face in each of these areas.

## Building for Peace

Our first and transcendent concern is for peace in the world.

Peace is never automatic.

It is more than the absence of war.

And it is inseparable from security.

A world in which the survival of nations is at the mercy of a few would spell oppression and injustice and fear. There can be no security without equilibrium and no safety without restraint.

PR #496

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Only when the rights of nations are respected, when accommodation
supplants force, can man's energies be devoted to the realization of
his deepest aspirations.

The United States will pursue the cause of peace with patience and an
attitude of conciliation in many spheres.

-- We shall nurture and deepen the ties of cooperation with
our friends and allies.

-- We shall strive to improve relations with countries of different
ideology or political conviction.

-- We shall always stand ready to assist in the settlement of
regional disputes.

-- We shall intensify our efforts to halt the spiral of nuclear
armament.

-- We shall strive to improve man's economic and social condition
and to strengthen the collaboration between developed and
developing nations.

-- We shall struggle for the realization of fundamental human
rights.

## Relations with Allies and Friends

America's close ties with the industrial democracies of North America, Western Europe and Japan have been the cornerstone of world stability and peace for three decades. Today, looking beyond immediate security and defense, we are working together on a range of new issues. Through our consultations, we have begun joint efforts to ease international tensions; to coordinate our national policies for economic recovery; to work together on common challenges such as energy and the environment; and to address the great issues that concern the developing countries.

These endeavors are in pursuit of universal goals; they are not directed at any nation or group of nations. They are designed as building blocks for a broader international community.

In the same spirit, the United States has opened a new dialogue with its neighbors in Central and Latin America. We have taken important steps toward resolving major political problems; we have begun close consultations for cooperation in promoting economic and social development. Alliance relations in the Western Hemisphere have a long history and great promise for the future. With imagination and dedication, we can make inter-American cooperation on the tasks of development an example of a pillar of the global community.

-4-

## East-West Relations

Peace to be secure must place on a more durable and reliable basis the relations between the nations possessing the means to destroy our planet.

In recent years, the bipolar confrontation of the last generation has given way to the beginning of dialogue and an easing of direct conflict. In this body, of all organizations, there is surely an appreciation of the global importance of lessened tension between the nuclear super-powers. All nations have a stake in its success. When weapons of mass destruction can span continents in minutes, nuclear conflict threatens the survival of all mankind.

We recognize that the suspicion and rivalry of a generation will not be swept away with a document or a conference. Real ideological and political differences exist. We shall firmly defend our vital interests and those of our friends. But we shall never lose sight of the fact that in our age peace is a practical necessity as well as a moral imperative. We shall pursue the relaxation of tensions on the basis of strict reciprocity. We know the difference between posturing and policy; we will not encourage the belief that anyone can benefit from artificial tensions. We are deeply conscious that we owe it to future generations not to be swayed by momentary passions.

The state of United States-Soviet relations today and just a decade ago presents a dramatic contrast. The world is no longer continually shaken by chronic and bitter confrontations. Periodic consultations -- including at the highest level -- encourage restraint and amplify areas of mutual interest. The forthcoming meeting between President Ford and General Secretary Brezhnev should strengthen this process.

Principles of mutual restraint have been enunciated at various summit meetings; they were reaffirmed by the Conference on Security and Cooperation in Europe two months ago. These principles provide a standard of behavior by which our actions will be tested. If they are observed -- as we insist -- and if neither side seeks unilateral advantage, the specter of general war will be lifted not only from our own people but from all nations. There is no more important task before us.

We have likewise pursued more constructive and beneficial relationships with the countries of Eastern Europe. The United States has many traditional and deep-rooted bonds of friendship with the proud peoples of that region. We see widening possibilities for practical cooperation as the barriers between East and West in Europe diminish.

There is no relationship to which the United States assigns greater significance than its new ties with the People's Republic of China. We hope that the well-being and progress of a quarter of humanity is an important element in global stability. The hostility of decades between our two nations has been replaced by a relationship of mutual respect which is

PR 496

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now a durable feature of the world scene. It serves
not only the interest of our two countries but also
the broader interests of peace and stability in Asia and around the
world. President Ford plans to visit the People's Republic of China
later this year to confirm the vitality of our relationship and to
advance the ties between us on the basis of the strict implementation
of the Shanghai Communique. We take seriously the process of normalizing
our relationship. We are dedicated to pursuing it.

## Containing Regional Conflicts

The world community must find a way to contain or resolve regional conflicts before they spread into global confrontation. Nowhere has the danger been greater than in the Middle East. Nowhere has the need for persistent and imaginative negotiation between suspicious rivals been more evident. Nowhere is there greater promise of moving from perennial crisis towards peace. Nowhere has the United Nations Security Council established a clearer framework of principles than in its Resolutions 242 and 338.

The road toward a lasting peace stretches long and hard before us. The Middle East has seen more than its share of dashed hopes and disappoint-ent. But the conclusion of the recent Sinai agreement marks a major step forward. It is the first agreement in the long and tragic history of the Arab-Israeli conflict which is not the immediate consequence of hostilities. It could mark a turning point.

The agreement deserves the support of all the countries assembled here because every nation here has an interest in progress towards peace in the Middle East. It is another step in the process launched by Security Council Resolution 338. The alternative was a continuing stalemate which would have led over time to another war creating a serious threat to world peace and the prospect of broad global economic dislocation.

Neither fear of the future nor pride should obscure the fact that an unusual opportunity for further progress on all issues now exists. But opportunities must be seized or they will disappear. I want to emphasize that the United States did not help negotiate this agreement in order to put an end to the process of peace but to give it new impetus.

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President Ford has stated that we will not accept stalemate and stagnation in the Middle East. That was true before the Sinai agreement was signed; it remains true today. The objective of our policy is not merely to create another temporary truce but to sustain the momentum of negotiations. The United States is determined to take every feasible step to help promote further practical progress towards final peace.

As a first step, it is essential that the Sinai agreement be carried out impeccably, within the terms and the time frame that are stipulated.

In the improved atmosphere thus created, the United States stands ready to participate in any promising initiative towards peace at the request of the parties concerned.

We have made clear that we are prepared to make a serious effort to encourage negotiations between Syria and Israel.

We also intend to consult over the coming weeks with all concerned regarding the reopening of the Geneva Conference which met at an early crucial phase. As Co-chairmen of the Geneva Conference together with the Soviet Union, our two countries have special responsibilities in this regard.

We are prepared also to explore possibilities for perhaps a more informal multilateral meeting to assess conditions and to discuss the future.

The United States seeks no special benefit; we do not attempt to exclude any country. We will cooperate with any nation that is willing to make a contribution. We have no preference for any particular procedure. We will support whatever process seems most promising. Our approach will continue to be both flexible and determined.

The search for final peace must be conducted on a wide basis. We have already begun discussions with the Soviet Union, with a view to assessing the current situation in the Middle East and weighing possible diplomatic approaches to bring about a just and durable peace in accordance with Security Council Resolutions 242 and 338. While we have had important differences with the Soviet Union, our two countries have held parallel views that the situation in the Middle East poses grave dangers and that partial steps must be part of and contribute to progress towards a comprehensive settlement.

The role of the world organization remains essential. If this organization had no other accomplishment than its effective peacekeeping role in this troubled area, it would have well justified itself. These soldiers of peace wearing the blue beret of the United Nations, as members of UNTSO, UNEF, UNDOF have become indispensable to the maintenance of the two 1974 disengagement accords as well as the Sinai agreement. I want to take this occasion to salute Secretary-General Waldheim and his staff, and General Siilasvuo, the Chief Coordinator of the UN Peacekeeping Missions in the Middle East, and all the men and women from many countries who have served in the forces without an enemy.

The deliberations of this Assembly regarding the Middle East also play a central role. They can encourage progress or exacerbate tensions.

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 decisions can be based on the recognition that dialogue requires quality of membership, or they can fuel a futile, self-defeating effort to discriminate -- in violation of the Charter -- against a member state participation is vital for a solution.

The Middle East will continue to be an area of anguish, turmoil, and peril until a just and durable peace is achieved. Such a peace must meet the principal concerns and interests of all in the area; among these are territorial integrity; the right to live in peace and security and the legitimate interests of the Palestinians.

In the Middle East today there is a yearning for peace surpassing any known for three decades. Let us not doom the region to another generation of futile struggle. Instead, let the world community seize the historic opportunity before it. The suffering and bravery of all the peoples of the Middle East cry out for it; the hopes and interests of all the world's peoples demand it. The United States promises its full dedication to further progress towards peace.

The contribution of the United Nations to the process of peace is essential in Cyprus as well. The Secretary-General has the responsibilities of organizing the peacekeeping forces on the island, and of facilitating the talks between the leaders of the Greek and Turkish communities.

Strict maintenance of the cease-fire is imperative. For this we look to the restraint of the parties and the efficacy of the UN peacekeeping forces.

We know that the world community shares our sense of urgency that the negative process be resumed and that the parties demonstrate flexibility and statesmanship. The status quo on the island must not become permanent; a rapid and equitable solution is essential. The Secretary-General has worked tirelessly and imaginatively under the most difficult circumstances to narrow the differences. He deserves the full support of the parties and of every nation here.

The details of a Cyprus settlement are for the two communities themselves to decide. However, in keeping with United Nations resolutions which the United States has fully supported, the following principles are essential:

- A settlement must preserve the independence, sovereignty and territorial integrity of Cyprus;

- It must ensure that both the Greek-Cypriot and the Turkish-Cypriot communities can live in freedom and have a large voice in their own affairs;

- The present dividing lines cannot be permanent. There must be agreed territorial arrangements which reflect the economic requirements of the Greek-Cypriot community and take account of its self-respect;

- There must be provision for the withdrawal of foreign military forces other than those present under the authority of international agreements;

- And there must be security for all Cypriots; the needs

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and wishes of the refugees who have been the principal victims and
tragic plight touches us all must be dealt with speedily and with com-

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for the Korean

These goals match the aspirations of the overwhelming majority of the Cypriot people as well as the interests of all neighboring states.

Another area where this organization will be called upon to take responsible action is the Korean peninsula.

This requires, above all, maintenance of the Armistice, pending agreement by all of the parties most directly concerned to replace it with a new arrangement. The existing Armistice is the only legal instrument committing the parties to maintain the peace. It is a carefully designed structure for monitoring and policing the military demarcation line.

The U.N. Commander-in-Chief is a signatory to that agreement. The Armistice machinery functions daily. None of the signatories has repudiated it. Nor could they do so, without serious risks to the peace of the world.

Since 1972, South and North Korea have pledged themselves to enter into a dialogue and to seek unification without resort to arms. This Assembly in 1973 and 1974 encouraged this process -- first in a consensus resolution supporting talks between the two sides; then in a resolution which looked toward termination of the UN Command. The United States agrees that twenty years after the end of the Korean war, it is timely to terminate the UN Command. We have, in fact, co-sponsored a resolution to that effect which is now before you.

It would be in keeping with this spirit of dialogue for this body to open it doors to full membership for the two Korean Governments. The United States supports the dual entry of both South and North Korea into the United Nations without prejudice to their eventual reunification. For our part, if North Korea and its allies would move to improve their relations with the Republic of Korea, we would be prepared to take similar reciprocal actions.

Operations can be accepted by the United States.

In underlining our goal of peaceful change for Southern Africa, I want to emphasize the importance of an early settlement in Namibia. My Government's opposition to South Africa's continuing occupation of Namibia and our rejection of South Africa's apartheid system are well known. The United States has consistently conveyed our position on this subject to South Africa. We will continue to do so.