Compromise in Nairobi

For more than two years--essentially, since the oil crisis--the Third World has been clamoring for a "new international economic order" in which a greater share of the world's wealth would be directed toward developing countries. Last weekend the fourth United Nations Conference on Trade and Development (UNCTAD IV) adjourned after 24 days of intense bargaining in Nairobi between the industrialized north and the poorer south. Though the less developed countries (LDCs) did not by any means win all their demands, delegates hoped that an eleventh-hour compromise would preserve the fragile climate of cooperation that has characterized north-south, rich-poor economic relations in the past year.

The UNCTAD agenda was exhaustive --covering such topics as the transfer of technology, international trade and the problems of landlocked developing nations--but, as expected, the crucial issue was commodities. The so-called Group of 77 (which actually includes about 110 developing countries) pressed for the creation of a $3 billion Common Fund that would attempt to stabilize world prices for various raw materials by maintaining buffer stocks in them (TIME, May 10). By buying and selling from these stocks, the LDCS argued, consumers and producers would be able to keep prices within an agreed range, thus avoiding both the sharp increases that fuel world inflation and the steep declines that bring producers to the brink of bankruptcy.

The countries with the biggest checkbooks--the U.S., Japan, West Germany, France and Britain--opposed the fund proposal. Instead, they offered to negotiate commodity agreements on a case-by-case basis, then to discuss stockpile financing plans at a later date. In the absence of agreements on individual commodities, they argued, the Common Fund would needlessly divert development money from worthy projects. But the Group of 77 refused to budge. "We have been trying the com-modity-by-commodity approach for so many years," complained Widjojo Nitisastro, Indonesia's Minister of State for Economic, Financial and Industrial Affairs. "We must have the Common Fund as a catalyst."

A number of LDCs threatened to try to launch the fund without the major developed countries. Norwegian Delegate Martin Huslid won long applause when he announced that his country would contribute $25 million regardless of the conference's outcome. Without the participation of the large industrial nations, however, a common fund would not have adequate financial resources to be effective. In such circumstances, moreover, the fund could be transformed from a cooperative enterprise into a weapon used by cartels of producer countries against their First World customers.

Commodity Accord. After some tense moments, a compromise emerged at week's end. Negotiations on certain commodities--perhaps rubber and iron ore, among others--will begin before the end of the year. Though the hard-liners among the Group of 77, notably Peru and the Philippines, pressed for a final confrontation, the breakthrough came at 5 a.m. when Chief U.S. Negotiator

Charles W. Robinson agreed to the creation of the Common Fund, but without promising U.S. participation.

Nor did the developing countries obtain the postponements they had been seeking on the debts they owe to richer nations. The industrialized countries did agree, however, to join them in drawing up common guidelines to be applied to countries on the verge of bankruptcy. The rich countries also agreed to ease the transfer of technology to poorer nations as well as the trade barriers that hamper Third World exports.

Hard Currencies. For the first time, the developing countries also pressed the Communist nations of Eastern Europe for concessions. The East Bloc has always argued that colonial expansion was the cause of the Third World's poverty and that the Communist nations thus were under no obligation to make "reparations." Unconvinced by this argument, the LDCs demanded more aid, better access to East Bloc markets and payment in hard currencies--but won no commitments from the Communist delegates.

Though the Third World did not get all it asked for from the capitalist countries either, the West's concessions were significant. Before May 1975, the U.S. was firmly opposed to commodity agreements of any kind. Since then, it has signed international pacts on tin and coffee, and expressed interest in beginning negotiations on several other commodities. The U.S. has also offered to help launch an International Resources Bank to finance new investments in raw materials in developing countries. Meanwhile, the West's economic recovery has helped lift commodity prices from last year's depressed levels. Largely for this reason, the burden of debt carried by the developing countries may be less severe than was first expected--a fact that may help to smooth further the irritated relations between the world's rich and poor nations.

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