GENERAL QUESTIONS

QUESTION: Is the Secretary's speech designed as a substitute or as a competitor for the New International Economic Order of the LDCs?

ANSWER: We are not anxious to enter into any competitions with other broad schemes or philosophies. The Secretary's speech consists of a series of proposals we believe to be practical. They should be considered on their merits and not in competition with the NIEO.

QUESTION: Does the United States continue to reject the NIEO?

ANSWER: We have not accepted the NIEO in part because it contains some concepts and proposals with which we basically disagree. There is, of course, much in it which we do not disagree with. However, it is our intention to get beyond the stage of arguing over specific provisions of the NIEO and into the stage of working out concrete measures which both the developing and developed worlds can benefit from.

QUESTION: Do you have any information whether the LDCs are planning to continue their confrontational approach based on the New International Economic Order?

ANSWER: (Based on info as of 8/25) We are sure there will be various views within the developing world. However, since Secretary Kissinger has begun to indicate a new U.S. approach to North-South economic problems, particularly through his Kansas City and OECD speeches, we have been encouraged that there have been some growing signs of greater interest by many LDCs in trying to develop the approach of building on common interests. We naturally hope that this will be the general approach of the LDCs at this Session.

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**QUESTION:** Doesn't the U.S. program outlined by Secretary Kissinger represent a capitulation to LDC-Group of 77 demands -- aren't you really admitting that confrontation with the U.S. pays?

**ANSWER:** We believe that the Secretary's speech -- rather than endorsing confrontation -- puts a premium on cooperative effort and negotiation. In addition, it is clear from the Secretary's speech that the approach and the proposals which he has put forth will have major benefits for both the developing and the industrial worlds. Therefore, we believe these have basic merit in and of themselves.

**QUESTION:** What kind of outcome do you expect from the Seventh Special Session?

**ANSWER:** Our objective in laying before the Session a series of specific and meaningful proposals is to engage in a constructive dialogue leading to practical solutions to world economic problems. We do not anticipate that the Special Session itself will be the forum to achieve these specific results. We hope, however, that the Session will focus on endorsement of practical goals and projects, referring implementation to specialized bodies.

**QUESTION:** Granted that some of the U.S. proposals seem forthcoming and innovative, aren't they really designed to preserve the present international economic system?

**ANSWER:** As the Secretary said, we don't want to get into an argument over whether we are improving the old system or making a new system. We obviously can't simply scrap the existing system. However, it is also obviously subject to change. The Secretary's statement represents major suggestions as to how the system can be improved to benefit

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LCJ

both developing and developed countries.

**QUESTION:** How does this forthcoming presentation square with the new tough line towards the LDCs advocated by Amb. Moynihan in his *Commentary* article?

**ANSWER:** Amb. Moynihan advocated that we talk more frankly and realistically with the developing countries. The speech does that. Amb. Moynihan has not, however, advocated, and the U.S. has never adopted a position of failing to respond to the need for practical and realistic solutions to important problems. In fact, Amb. Moynihan's *Commentary* article does advocate that the UN concentrate more on realistic approaches to problems. The Secretary's presentation does this.

**QUESTION:** What do you intend to do if the less developed countries reject your proposals and continue to push for adoption of their more radical agenda?

**ANSWER:** We think our proposals represent a serious effort to meet specific needs of the less developed nations across a broad spectrum. We hope they will receive a serious hearing and will form the basis of a genuine dialogue leading toward specific agreements. This is the essence of negotiation. We would be disappointed if this does not happen. However, in any event, we intend to pursue what we believe to be a constructive approach.

**QUESTION:** Can it really be expected that the pattern of confrontation between developing countries and the industrialized countries can be changed in this two-week session?

**ANSWER:** We do not expect a revolutionary change all at once. We hope it will be possible to begin to turn away from past patterns of confrontation towards concentration on specific projects of cooperation. That is why our presentation stresses

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practical steps that can be taken.

**QUESTION:** Have we consulted our friends in the industrialized world on the Secretary's approach and the specific proposals?

**ANSWER:** Throughout the last year there have been a long series of discussions, both bilateral and multilateral in the OECD, about the 7th Special Session. We have exchanged views extensively with our friends about ideas which the Secretary put forward.

**QUESTION:** What is the viewpoint of the other industrialized countries?

**ANSWER:** They will, of course, make known their own reactions. However, we have felt that the other developed countries share with us a general desire to put our relations with the developing countries on a better plane and to begin to concentrate more on practical steps which can be taken to meet many of the points put forward by developing countries.

F. Y. I. Refer all detailed and technical questions to State.

INTRODUCTION

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. But 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. 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.

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
isolation. Neither can extort them from the other --

the developing countries least of all. For they
would pay the greater cost of a 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 as 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.

strident
History has left us the legacy of/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
nations affect them. But those/who are asked to provide
resources and effort to carry out the decisions must
be granted a commensurate voice.

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.

Therefore, we must find new means. The United
States offers today concrete proposals for inter-
national action 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 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 --
for these there are no substitutes.

14

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
this 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 a serious international dialogue
on the responsibilities which confront us all together.

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
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

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16.

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 require-
ment of an effective strategy for development.

Without this foundation, sound development programs
cannot proceed and the great efforts that develop-
ment 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
inflationary
non-/- expansion;

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

17.

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.

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

18.

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 re-launch 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

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19.

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

20.

hope to be met in that same spirit.

The third basic factor in economic security
is the stability of export earnings. The develop-
ment 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 who 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

21.

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

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22.

exclusively on stabilizing commodity prices would
not provide sufficient protection to the many
developing countries whose earnings also depend on
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
Facility to stabilize overall export earnings.

[c]

23.

-- The Facility would give loans to sustain develop-
ment programs in the face of export fluctuations -- up
to a total of $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.

conditions
-- Eligible countries could draw most, or under certain/
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

24.

balance of payments conditions, and part reserved for
cases of particularly violent swings in commodity earnings.

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

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.

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 fluc-

tuate 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 benefit of concessional
aid for developing countries is vitiated. For indus-
trialized countries, it means a more steady export market.
For developing countries, it helps assure that develop-
ment 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.

26

ACCELERATING ECONOMIC GROWTH

It is not enough to ensure 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 infusion 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 technolo-
gical 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; it 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

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28

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 corporate 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 the regional development banks
borrow extensively to lend to developing nations. The
United States urges the expansion of these programs. We are

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29

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 congressional 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 the 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 --

30

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 develop-

31

LC

ing 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 encourag-
ing that the Latin American countries are considering a
regional financial safety net to underpin their access to
capital markets by mutual commitments of financial back-
ing.

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.

32

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.

Energy, first, 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

33

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, as well
as conventional fuels. 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 forth-
coming dialogue between consumers and producers. We will
propose, in this dialogue, creation of an International
Energy Institute bringing together developed and developing,

34

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 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.

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35

-- 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, much of it in producing countries. The

36

[c]

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.

36A

We propose 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.

37

-- 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,

38

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 enter-
prises must act in full accordance with the sovereignty
of host governments. 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 inter-
national investment.

Specifically, the United States believes that:

- Transnational enterprises are obligated to obey

40

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.

-- Host governments in turn should 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 investments, will occur less frequently.

41

-- 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.

42

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 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.

The United States believes that just solutions
are achievable -- and necessary. If the world community
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 implications for economic development
are profound.

LC

TRADE

44

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 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.

For developing nations, trade is perhaps the most important engine of development. Increased earnings from exports help pay for both the imports that are

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45

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 in-
dustries 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

46

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.

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47

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 devising 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 trading system, and share in its benefits, the rules will be subject to increasing challenge, the stability of the system will be undermined, and the benefits for all nations will be jeopardized.

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48

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.

49

Secondly, 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 industrialized 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 United
States program will be put into effect on January 1,
1976. And before that date, we will begin consulta-
tions 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.

50

Third, in keeping with the Tokyo Declaration, we should adapt rules on 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 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.

51

Finally, we are ready to join with other parti-
cipants in the MTN 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 de-
priving other countries of needed goods--can trigger

52

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.

53

COMMODITIES

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.

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54

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.

They 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 a devastating blow, soaking up aid funds and the earnings by which they hoped to finance imports. All this makes a mockery of development plans.

But the problems of commodities are not the problems only of developing countries. Gyrating prices complicate economic decisions in industrial countries. The industrialized countries are in fact the largest exporters of food and most minerals. And consumers in industrial countries have

55

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 -- 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 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

56

for realistic and cooperative approaches to other inter-
national economic issues.

The United States policy is now one of maximum pro-
duction. 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

57

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;

58

-- 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.

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

59

since then offered specific proposals and begun negotiations. But the international effort lagged when improved harvests seemed to diminish the immediate danger of world starvation. My Government today declares that it is time this to create / 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

60

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

61

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.

Accordingly, the United States proposes the follow-
ing approach to commodity arrangements:

-- We recommend that a consumer-producer
forum be established for every key commodity to

62

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

63

prices and supplies entering the market.

-- We will also join 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 Interna-
tional 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 earn-
ings of countries dependent on commodities trade. My
Government also believes that an effective approach to

64

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 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 tradi-
tional 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 inter-

65

national 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 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.

66

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.

THE POOREST NATIONS

67

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.

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

Whatever adversity the rest of mankind endures, it is these people who endure the most. Whatever problems we have, theirs are monumental. Whatever economic consequences flow from the decisions that we all make,

68

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 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 deter-
mined 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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70

Secondly, security requires stable export earnings.
The new approach that we are proposing today for
earnings stabilization can provide major 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 United States food aid budget provides for
almost six 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.

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71

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 savings could match the total of all the food aid being given around the world. Therefore we urge that the FAO, 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

72

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 para-medical
personnel. The United States will support a major
expansion of the efforts already underway, including
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 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

73

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 United States development assistance
now 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 Associa-
tion of the World Bank group is a principal instrument
whose great potential has not been fully realized. After Con-
gressional consultations, the United States will join
others in a substantial replenishment of the resources
of the IDA --

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
25 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 to boost agricultural
production remain indispensable. President Ford is
asking Congress for authorization to double our
bilateral agricultural assistance this year to $582

75

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, transporta-
tion 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--

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76

provided that others will add their support for a
combined goal of at least one billion dollars.

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

77

In every area of endeavor that I have described--
economic security, growth, trade, commodities and the
needs of the poorest--the developing countries them-
selves 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 processes of decision should be fair. No
country or group of countries should have exclusive power
in 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

78

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 processes 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 doubled or more -- on the basis of
objective criteria. Basic economic realities, such as
the size of economies, participation in the world trade
and financial contributions, must carry great weight.

79

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 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

80

the thoughtful report by the Secretary-General's
group of 25 experts on structural reforms in the
UN system. We will consider very seriously its
recommendations. In our view, an improved UN
organization must include:

- 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.

82

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 condi-
tion. 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

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83

submerged in our common failure. The speeches made here this week will be placed alongside many other lofty pro-nouncements 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 economic security -- to safeguard the world economy, and particularly the developing countries, against the cruel cycles that undermine their export earnings.

-- 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.

84

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

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E.O. 11652: N/A
TAGS: PFOR, ENG, UNGA
SUBJ: NY TIMES STORIES ON SPEECH TO 7TH SPECIAL SESSION
OF UNGA

1. FOLLOWING IS TEXT OF FRONT PAGE ARTICLE IN NEW YORK TIMES, SEPTEMBER 2, ON SPEECH TO 7TH SPECIAL SESSION:

QTE: KISSINGER OFFERS POOR LANDS LINKS TO RICHER NATIONS

THE UNITED STATEW, RESPONDING TO DEMANDS FROM DEVELOPING COUNTRIES FOR RADICALLY NEW WAYS TO BRIDGE THE CHASM BETWEEN THEM AND THE RICH NATIONS, OUTLINED A BROAD SET OF SPECIFIC PROPOSALS FOR COOPERATION HERE TODAY.

THE PROPOSALS, PREPARED BY SECRETARY OF STATE KISSINGER IN LONG CONSULTATIONS WITHIN THE ADMINISTRATION AND WITH FOREIGN GOVERNMENTS, WERE PUT FORWARD AT THE OPENING OF A SPECIAL SESSION OF THE GENERAL ASSEMBLY DEVOTED TO THE PROBLEMS OF DEVELOPMENT AND ECONOMIC COOPERATION.

WITH MR. KISSINGER IN THE MIDDLE EAST, THE ADDRESS CONTAINING THE PROPOSALS WAS READ BY THE CHIEF AMERICAN DELEGATE, DANIEL P. MOYNIHAN. HE SAID THAT THE KISSINGER MESSAGE WAS FULLY BACKED BY PRESIDENT FORD.

$10-BILLION LOANS PROPOSED

THE PROPOSALS INCLUDE THE FOLLOWING:

THE CREATION WITHIN THE INTERNATIONAL MONETARY FUND OF A FINANCING AGENCY THAT WOULD LEND DEVELOPING COUNTRIES UP TO $10-BILLION IN THE AMOUNT OF $2.5Q-BILLION OR MORE A YEAR TO SUSTAIN THEIR DEVELOPMENT PROGRAMS IN THE FACE OF FLUCTUATIONS IN DEMAND FOR THEIR EXPORTS, CHIEFLY RAW MATERIALS.

3 SEP 72 01 25Z

S/S - 15

THE ESTABLISHMENT OF AN INTERNATIONAL INVESTMENT TRUST TO
ATTRACT CAPITAL FOR INVESTMENT IN DEVELOPING COUNTRIES
BY SAFEGUARDING AGAINST MAJOR LOSSES. THE TRUST WOULD BE
MANAGED BY THE WORLD BANK'S INTERNATIONAL FINANCE CORPORATION.

THE CREATION OF AN INTERNATIONAL ENERGY INSTITUTE TO
SPUR ENERGY DEVELOPMENT.

THE ESTABLISHMENT OF AN INTERNATIONAL INDUSTRIALIZATION
INSTITUTE TO AID DEVELOPING COUNTRIES WITH RESEARCH ON
INDUSTRIAL TECHNOLOGY.

THE ESTABLISHMENT OF AN INTERNATIONAL CENTER FOR THE
EXCHANGE OF TECHNOLOGICAL INFORMATION.

## IMPORT DEALS PROMISED

THROUGH THE ADDRESS, WHICH TOOK AN HOUR AND 45 MINUTES
TO READ, THE UNITED STATES PROMISED DEVELOPING NATIONS THAT IT
WOULD GRANT PREFERENTIAL IMPORT TARIFFS FOR THEIR GOODS,
ESPECIALLY TROPICAL PRODUCTS.

THE MESSAGE CONCLUDED: "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."

THE FIRST REACTIONS BY DELEGATES FROM COUNTRIES SUCH AS
ALGERIA, IRAN AND YUGOSLAVIA WERE FAVORABLE. THE ALGERIAN
CHIEF DELEGATE, ABDELLATIF RAHAL, SAID HE HAD FOUND "MANY
POSITIVE IDEAS" IN THE KISSINGER MESSAGE THAT REQUIRED
THOROUGH STUDY.

A REPRESENTATIVE OF AN INDUSTRIALIZED NATION, IVOR RICHARD
OF BRITAIN, TERMED THE KISSINGER MESSAGE "THE NEATIEST
SPEECH MADE ON ECONOMIC DEVELOPMENT SINCE THE MARSHALL PLAN."

THE SECRETARY OF STATE, NOTING THAT THE UNITED STATES WAS THE
WORLD'S LARGEST FOOD PRODUCER AND EXPORTER, SAID THAT ITS
"POLICY IS NOW ONE OF MAXIMUM PRODUCTION." HE SAID THAT THE
POOREST COUNTRIES, TOO, MUST RAISED THEIR FARMING OUTPUT,
AND PRESSED FOR THE ARLY ESTABLISHMENT OF A PREVIOUSLY PROPOSED
INTERNATIONAL FUND FOR AGRICULTURAL DEVELOPMENT.

## YEAR OF REVIEW POSED

MR. KISSINGER ALSO SUGGESTED THAT 1976 "BE DEDICATED AS A
YEAR OF REVIEW AND REFORM OF THE ENTIRE UNITED NATIONS
DEVELOPMENT SYSTEM."

WHILE MR. KISSINGER SHOWED THAT HE TOOK THE COMPLAINTS
AND CRITICISMS OF DEVELOPING OR THIRD WORLD COUNTRIES
SERIOUSLY, HE ALSO DID SOME TALKING BACK.

[L]

3

HE WARNED THEIR WORLD COUNTRIES NOT TO MAKE MULTINATIONAL CORPORATIONS "OBJECTS OF ECONOMIC WARFARE," PRAISING SUCH COMPANIES AS "POWERFUL INSTRUMENTS OF MODERINIZATION." AT THE SAME TIME HE SAID THAT THEY SHOULD OBEY LOCAL LAWS AND "REFRAIN FROM UNLAWFUL INTERVENTION IN THE DOMESTIC AFFAIRS OF HOST COUNTRIES."

REFERRING TO THE POLITICAL STRATEGY OF THE GROUP OF COUNTRIES THAT CALL THEMSELVES NON-ALIGNED, THE SECRETARY OF STATE SAID THAT IT WAS 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."

AT A FOREIGN MINISTERS' MEETING IN LIMA, PERU, LAST WEEK, THE GROUP OF NONALIGNED GREW TO 82 MEMBERS. IN TODAY'S MESSAGE, MR. KISSINGER OBSERVED THAT "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."

THE SECRETARY OF STATE ADDED: "IT IS IRONIC ALSO THAT THE MOST DEVASTATING BLOW TO ECONOMIC DEVELOPMENT IN THE DECADE CAME NOT FROM 'IMPERIALISTIC RAPACITY' BUT FROM AN ARBITRARY, MONOPOLISTIC PRICE INCREASE BY THE CARTEL OF OIL EXPORTS."

## ALLUSION TO EMBARGO

ADVOCATING FAIRNESS IN INTERNATIONAL ECONOMICS, MR. KISSINGER SAID THAT NO COUNTRY OR GROUP OF COUNTRIES SHOULD HAVE EXCLUSIVE POWER IN AREAS BASIC TO OTHERS, LIKE OIL, TRADE AND FINANCE. HE INSISTED THAT "THE WORLD NEEDS A SYSTEM IN WHICH NO NATION, DEVELOPED OR DEVELOPING, ARBITARARILY WITHHOLDS OR INTERFERES WITH NORMAL EXPORTS OF MATERIALS." A CLEAR ALLUSION TO THE OIL EMBARGO PROCLAIMED BY THE ARAB PRODUCING COUNTRIES IN 1973.

IN HIS REMARKS ABOUT INTERNATIONAL TRADE, MR. KISSINGER MADE A BRIEF, COOL REFERENCE TO PRICE INDEXING, THE SYSTEM SOUGHT BY THIRD WORLD COUNTRIES WHEREBY THE PRICES FOR RAW MATERIALS WOULD BE LINKED TO THE COST OF MANUFACTURED PRODUCTS THAT DEVELOOING COUNTRIES HAVE TO BUY FROM THE INDUSTRIAL NATIONS.

A STATE DEPARTMENT OFFICIAL, ASKED FOR A COMMENT ON MR. KISSINGER'S REMARK ON PRICE-INDEXING, SAID THAT WASHINGTON WAS READY TO DISCUSS THE PROPOSED MECHANISM, "BUT IT IS NOT A PROPOSAL THAT THE UNITED STATES SUPPORTS."

RATHER, MR. KISSINGER SAID IN HIS MESSAGE, THE UNITED STATES "PROPOSES TO DISCUSS NEW ARRANGEMENTS IN INDIVIDUAL COMMODITIES ON A CASE-TO-CASE BASIS." HE SAID THAT CONSUMER-PRODUCER FORUMS SHOULD BE SET UP FOR EVERY KEY COMMODITY, LIKE GRAINS OR COPPER.

DURING THE DELIVERY OF THE MESSAGE, SOME DELEGATES DRIFTED OUT FOR COFFEE, BUT THE HALL WAS AGAIN CROWDED WHEN MR. MOYNIHAN ENDED, AND HE RECEIVED LONG APPLAUSE. ENVOYS FROM SCORES OF NATIONS CROWDED AROUND HIM TO CONGRATULATE HIM.

THE SPECIAL SESSION, CONVENED AT THE REQUEST OF THIRD WORLD COUNTRIES, IS DUE TO LAT UNTIL SEPT. 12. IT IS TO BE FOLLOWED BY THE 30TH REGULAR GENERAL ASSEMBLY, BEGINNING SEPT. 16.

ALGERIA'S FOREIGN MINISTER, ABDELAZIZ BOUTEFLIKA, ACTED AS A SPOKESMAN FOR THE THIRD WORLD TODAY WHEN HE WAS ELECTED PRESIDENT OF THE SPECIAL SESSION. MR. BOUTEFLIKA IS THE OUTGOING PRESIDENT OF THE GENERAL ASSEMBLY.

IN HIS ACCEPTANCE SPEECH, MR. BOUTEFLIKA, WHO HAS BEEN SHARPLY CRITICAL OF THE UNITED STATES AND OTHER WESTERN NATIONS, SOUNDED A CONCILIATORY NOTE. HE SAID THAT THE DEVELOPING COUNTRIES' DEFENSIVE ATTITUDE "IS NOT INCOMPATIBLE WITH THE SEARCH FOR A DIALOGUE."

THE VIEWS OF THE RUOPEAN ECONOMIC COMMUNITY WERE CONVEYED TO THE SESSION BY ITALY'S FOREIGN MINISTER, MARIANO RUMOR, WHO IS NOW HOLDING THE CHAIRMANSHIP IN THE COUNCIL OF THE NINE-COUNTRY GROUP.

A PROPOSAL TO NEGOTIATE A GENERAL AGREEMENT ON TRADE BETWEEN DEVELOPED AND DEVELOPING COUNTRIES WAS PRESENTED TO THE SESSION BY BRAZIL'S EXTERNAL RELATIONS MINISTER, ANTONIO FRANCISCO AZEREIDO DA SILVEIRA.

HE SAID SUCH AN AGREEMENT SHOULD ESTABLISH "NEW RULES OF THE GAME FOR NORTH-SOUTH TRADE." MOST OF THE DEVELOPING COUNTRIES ARE IN THE SOUTHERN HALF OF THE GLOBA.

2. FOLLOWING IS TEXT OF LEONARD SILK'S ARTICLE IN NEW YORK TIMES, SEPTEMBER 2, ON SPEECH TO 7TH SPECIAL SESSION:

QTE: CONCILIATORY KISSINGER MESSAGE AIMS TO SOFTEN RICH-POOR CONFLICT

SECRETARY OF STATE KISSINGER'S MESSAGE TODAY TO THE SEVENTH SPECIAL SESSION OF THE UNITED NATIONS GENERAL ASSEMBLY REPRESENTS AN IMAGINATIVE AND INDEED HIGHLY INGENIOUS DEVELOPMENT OF UNITED STATES FOREIGN ECONOMIC POLICY.

THE TASK THAT MR. KISSINGER AND HIS AIDES FACED WAS TO PRODUCE A MAJOR POLICY STATEMENT THAT SECRETARY OF THE TREASURY WILLIAM E. SIMON AND HIS AIDES COULD ACCEPT.

SCOFFERS MAY SAY THAT THE RESULT RESEMBLES ONE OF THE DR. DOOLITTLE'S FANTASTIC ANIMALS, THE PUSH-ME-PULL-YOU OR A MEDIEVAL "CAMELEOPARD"---HALF CAMEL, HALF LEOPARD. IF REPORTS OF PAST CONFLICTS BETWEEN THE STATE DEPARTMENT AND THE TREASURY ARE TO BE CREDITED, THE APPROPRIATE ANIMALS NOW BEING MARRIED MIGHT BETTER BE COMPARED TO THE BABCON AND THE LEOPARD OR THE SNAKE AND THE MONGOOSE.

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5

CONCORDAT ON POLICY STRESSED

MR. KISSINGER'S MESSAGE GOES OUT OF ITS WAY TO STRESS THE CONCORDAT NOW REACHED BY STATE AND TREASURY ON FOREIGN ECONOMIC POLICY. MR. KISSINGER SPECIFICALLY STATES THAT "TREASURY SECRETARY SIMON, WITH WHOM I HAVE WORKED CLOSELY ON OUR PROGRAM, WILL DISCUSS IT TOMORROW IN RELATION TO THE WORLD ECONOMY." MR. SIMON'S SPEECH WILL BE DELIVERED HERE TO THE JOINT MEETING OF THE INTERNATIONAL MONETARY FUND AND THE WORLD BANK--AGENCIES THAT WOULD PLAY A SIGNIFICANT ROLE IN THE DESIGN LAID OUT BY SECRETARY KISSINGER.

TREASURY SECRETARY SIMON, INTERVIEWED HERE, SAYS THE KISSINGER MESSAGE, WHICH WAS READY BY DANIEL P. MOYNIKAN, THE CHIEF UNITED STATES DELEGATE AT THE UNITED NATIONS, WAS

"DEVELOPED JOINTLY," AND THAT HE WOULD BE STRESSING OTHER ASPECTS IN HIS SPEECH TOMORROW/

MR. SIMON DID NOT ATTEMPT TO CLOAK THE DIFFICULTIES OF MARRYING THE TREASURY TO THE STATE DEPARTMENT POSITION. "THE MISSIONS OF THE STATE DEPARTMENT DIFFER FROM OUTS." HE SAID, "AND WHAT HENRY AND I DO IS RECONCILE THE DIFFERENCES."

"WHEN DIFFERENCES CANNOT BE COMPROMISED," SAID MR. SIMON, "WE TAKE THEM TO THE PRESIDENT TO RESOLVE." BUT HE ADDED THAT THIS WAS NOT NECESSARY IN THIS CASE, NOR IN LAST WINTER'S SUCCESSFUL AMERICAN EFFORT TO ESTABLISH A "SOLIDARITY FUND" OR "SAFETY NET" OF $25-BILLION TO AID OIL-IMPORTING INDUSTRIAL COUNTRIES FACED WITH SERIOUS PAYMENTS PROBLEMS.

SIGNIFICANT ECONOMIC COST

THE BASIC MISSION OF THE STATE DEPAQRTMENT IS DIPLOMATIC-- IT SEEKS, IF POSSIBLE, TO PRESERVE THE PEACE AND TO PROTECQT AMERICAN SECURITY INTERESTS. THIS TENDS TO MAKE THE DEPARTMENT EXTREMELY SENSITIVE TO ISSUES THAT THREATEN THE PEACE, EVEN WHEN RESOLVING THESE ISSUES MAY INVOLVE SIGNIFICANT ECONOMIC COST TO THE UNITED STATES. THE STATE DEPARTMENT TENDS TO BE PRAGMATIC AND WHEN POSSIBLE ACCOMMODATORS IN MEETING THE DEMANDS OF OTHER NATIONS OF DIFFERENT POLITICAL AND ECONOMIC IDEOLOGIES.

THE TREASURY DEPARTMENT FOCUSES ON ECONOMIC RATHER THAN DIPLOMATIC OBJECTIVES. IT TENDS TO BE MORE RESPONSIVE TO DOMESTIC ECONOMIC PRESSURES WITHIN THE UNITED STATES. INTERNATIONALLY, TREASURY POLICY HAS BEEN FOR SOME TIME AIMED AT INCREASING TRADE LIBERALIZATION AND WORLD ECONOMIC INTEGRATION. IT HAS SOUGHT MEANS OF INCREASING OPPORTUNITIES FOR AMERICAN MULTINATIONAL CORPORATIONS AND BANKS TO GO SAFELY AND DO BUSINESS WHERE THEY WILL.

COMBINING THESE TWO APPROACHES TO THE STATE DEPARTMENT
POLICY AIMED AT BEING CONCILIATORY AND ACCOMMODATIVE TO THE
DEVELOPING NATIONS WHO HAVE BEEN DEMANDING A "NEW ECONOMIC
ORDER" WITH THE TEASURY'S GOAL OF AN OPEN, NON-DISCRIMINATORY,
LIBERAL WORLD ECONOMY HAS BEEN NO EASY TASK.

IN FACT, PARTS OF THE KISSINGER MESSAGE STILL SOUND AS
THOUGH THE CAMEL HAD SUFFOVED IN HAVING HIS DRAFT SURVIVE
WHILE THE LEOPARD GOT HIS WORDS IN LATER.

FOR INSTANCE, IN ONE SECTION THE KISSINGER MESSAGE STATES THAT PRICE
STABILIZATION FOR THE RAW MATERIALS
AND COMMODITIES OF THE DEVELOPING COUNTRIES IS "NOT GENERALLY
A PROMISING APPROACH," AND THAT "FOR MANY COMMODITIES IT
WOULD BE DIFFICULT TO ACHIEVE WITHOUT SEVERE RESTRICTIONS
ON PRODUCTION OR EXPORTS AND EXTREMELY EXPENSIVE BUFFERE
STOCKS."

BUT LATER THE MESSAGE CALLS FOR SPECIAL TREATMENT OF THE
DEVELOPING COUNTRIES THROUGH A VARIETY OF MEANS, SUCH AS
TRADE PREFERENCES, FAVORABLE CONCESSIONS AND EXCEPTIONS
THAT REFLECT THE ECONOMIC STATUS OF THE POOR.

I.HM F. FINANCING URGED

THE MESSAGE ALSO CALLS FOR CREATING BUFFER STOCKS, "WHERE
VOLATILE DEMAND IS COMBINED WITH LIMITED ABILITY TO MAKE SHORT-
TERM INCREASES IN PRODUCTION." THIS APPLIES PARTICULARLY,
MR. KISSINGER SAID, TO FOODSTUFFS. HE PROPOSED AN INCREASE
IN TOTAL WORLD FOOD GRAINS TO AT LEAST 30 MILLION TONS OF
WHEAT AND RICE, WITH THE UNITED STATES PREPARED TO HOLD A
MAJOR SHARE.

HE ALSO CALLED FOR CONSUMER-PRODUCER "FORUMS FOR EVERY KEY
COMMODITY." HE SAID THIS WOULD BE IMPORTANT IN COPPER AND
THAT THE UNITED STATES WAS READY TO SIGN AN INTERNATIONAL
AGREEMENT ON TIN. HE SAID THAT THIS COUNTRY WOULD ALSO PARTICIPATE AC
TIVELY ON
COFFEE, COCOA AND SUGAR TO REDUCE "SWINGS IN PRICES AND
SUPPLIES."

THE SECRETARY OF STATE CALLED FOR THE INTERNATIONAL MONETARY
FUND TO INCREASE ITS FINANCING OF BUFFER STOCKS. THE PRESIDENT
OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT,
ROBERT S. MCNAMARA, HAS ALREADY MADE CLEAR HIS DESIRE FOR
THE WORLD BANK TO MAKE LOANS TO SUPPORT BIGGER BUFFER STOCKS AIMED AT
PRICE OR INCOME STABILIZATION.

HOWEVER, THE APPARENT CONFLICT, BETWEEN THE FREE-TRADE
AND THE SPECIAL-PREFERENCE APPROACHES TO LIFE IS RESOLVED
BY THE FOLLOWING FORMULA: AS THE DEVELOPING COUNTRIES
PROGRESS, MR. KISSINGER SAID, "TO A HIGHER LEVEL OF
DEVELOPMENT, THEY MUST GRADUALLY ACCEPT THE SAME OBLIGATIONS
OF RECIPROCITY AND STABLE ARRANGEMENTS THAT OTHER COUNTRIES
UNDERTAKE."

LIBERAL TRADE POLICY IS ALSO UPHELD WITHIN THE CONTEXT
OF HELPING THE POOR COUNTRIES THROUGH "GENERALIZED" TARIFF
PREFERENCES FOR THEIR PRODUCTS.

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NEW AID MECHANISM

THE GENERAL PHILOSOPHY OF THE KISSINGER MESQSGAGE IS TO AIM AT STABILIZING INCOMES OF THE POOR RATHER THAN THE PRICES OF THEIR COMMODITIES.

THE MESSAGE REPRESENTS A SHIFT IN UNITED STATES POLICY FROM BILATERAL TOWARD MUTLILATERAL AID. THE NEW "TRUST FUND" TO BE ESTABLISHED BY THE I.M.F.'S SELLING SOME OF ITS GOLD IS BROUGHT FORTH BY MR. KISSINGER AS A SIGNIFICANT NEW AID MECHANISM FOR THE OOR.

ALTHOUGH THAT APPROACH STILL SEEMS TO HAE MANY PROBLEMS AHEAD OF IT, GIVEN THE DIFFICULTY OF SELLING HUGE AMOUNTS OF GOLD TO THE OPEN MARKET WITHOUT DRIVING DOWN THE PRICE ON THE OPEN MARKET, MR. KISSINGER HAS NEVERTHELESS DISCLOSED--- AS SECRETARY OF THE TREASURY SIMON PUTS IT-- A "LARGER

CONCEPT" FOR THE NEW I.M.F. TRUST FUND THAN HAD HITER-TO BEEN REVEALED.

UNTIL NOW, THE TRUST FUND HAD BEEN CONCEIVED OF CHIEFLY IN THE CONTEXT OF ITS IMPACT UPON GOLD. IT IS QUITE CONCEIVABLE--ALTHOUGH BY NO MEANS SURE--THAT THE TRUST FUND WILL EVENTUALLY RECEIVE THE VAST PROPORTION OF THE I.M.F.'S PRESENT GOLD HOLDINGS, WHICH, VALUED AT CURRENT FREE-MARKET PRICES, EXCEED $20-BILLION.

THE MULTILATERAL APPROACH TAKEN BY MR. KISSINGER WOULD BE REINFORCE WITH A COVEY OF NEW INTERNATIONAL AGENCIES-- INCLUDING THE INTERNATIONAL FUND FOR AGRICULTURAL DEVELOPMENT, THE INTERNATIONAL INDUSTRIALIZATION INSTITUTE, THE INTERNATIONAL CENTER FOR THE EXCHANGE OF TECHNOLOGICAL INFORMATION, THE INTERNATIONAL ENERGY INSTITUTE AND POSSIBLY OTHERS. IN SOME RESPECTS THE SPEECH READS LIKE A PROFESSORIAL OR BUREAUCRATIC NIGHTMARE.

CONGRESS IS GONG TO HAVE TO BE PERSUADED TO ENDORSE THIS NEW APPROACH SPEQLLED OUT BY MR. KISSINGER AND PUT UP THE MONEY TO HELP FUND IT. CONGRESS HAS BEEN LOATH TO BACK LARGE-SCALE MULTILATERAL EFFORTS, ALTHOUGH IT IS UNCLEAR WHETHER WHAT MR. KISSINGER IS PROPOSING WOULD INVOLVE SUBSTANTIAL BUDGETARY APPROPRIATIONS.

HE REALIZES THAT CONGRESS IS OPPOSED TO SIGNIFICANT APPROPRIATIONS FOR BILATERAL FOREIGN AID, AND INDEED MAKES THAT A BASIS FOR HIS RECOMMENDED SHIFT FROM AID TOWARD TRADE TO HELP THE POOR COUNTRIES.

EVEN SO, SHARP ATTACKS ON THE UNITED STATES BY THIRD-AND FOURTH-WORLD COUNTRIES WILL ONLY DEEPEN CONGRESSIONAL ANTIPATHY FOR AMERICAN SUPPORT FOR INTERNATIONAL VENTURES.

BUT IF CONGRESS CAN BE PERSUADED TO QGO ALONG, UNITED STATES FOREIGN ECONOMIC POLICY IS NOW AIMED AT BLENDING LIBERAL TRADE WITH RQEALIST ADJUSTMENTS TO SOFTEN THE CONFLICT BETWEEN RICH AND POOR COUNTRIES. THE BASIC THRUST OF THE KISSINGER MESSAGE WAS CERTAINLY CONCILIATORY. UNQTE. MOYNIHAN

UNQUOTE

BORTONSON