Brandt Sounds the Tocsin

To trim the world's wealth gap

Reshaping worldwide North-South relations has become a crucial commitment to the future of mankind. We believe this to be the greatest challenge to mankind for the remainder of this century.

With that dramatic call to action, former West German Chancellor Willy Brandt this week presents his long-awaited report on the Gordian problem of relations between rich and poor nations. With a barrage of chilling statistics and often eloquent prose, the 1971 Nobel Peace prizewinner proposes a summit of some 25 world leaders to focus on "mutual interests in the field of peace, justice and jobs." While charging that the "air is thick with alibis for inaction," he says that nothing less than a summit will concentrate world attention on the "mortal dangers threatening our children and grandchildren."

Three years ago, World Bank President Robert S. McNamara asked Brandt to head a private study on the unsettled and potentially explosive relations between industrialized and developing countries. Joining Brandt were 17 other luminaries, including such former heads of government as Chile's Eduardo Frei, Britain's Edward Heath and Sweden's Olof Palme. Americans on the Brandt commission were Katharine Graham, chairman of the Washington Post Co., and Peter G. Peterson, chairman of the Wall Street investment bank of Lehman

Brothers Kuhn Loeb. The group held ten meetings over a two-year period and consulted experts ranging from Henry Kissinger to Economist Barbara Ward.

The North-South problem as presented by the 225-page report is both serious and growing worse. World stability and peace are threatened by the disparity between industrially rich but sometimes materials-poor nations concentrated in the Northern Hemisphere and the industrially poor but often materials-rich, the yearning, the demanding, the mostly non-white nations in what is roughly called the Southern Hemisphere.

Three-quarters of humankind is living on only one-fifth of the world's income. The commission report adds that 800 million people exist in desperate poverty. One American today uses as much commercial energy as nine Mexicans, 16 Chinese or 1,072 Nepalese. More than 90% of the total manufacturing capacity is located in wealthy developed countries, which increasingly block imports of industrial products from the poor nations. The explosion of oil prices has pushed the needy countries into a bleak house of poverty. The combined debt of the Third World has grown from $70 billion at the end of 1970 to $300 billion today.

In an "emergency program" for 1980-85, the Brandt report proposes four steps:

Increased Development Aid. An additional $30 billion beyond the $20 billion annually already provided by the developed countries is deemed necessary. The International Monetary Fund is also encouraged to expand its gold sales, with the proceeds being used to subsidize loans to poor countries. The commission urges the World Bank and other international organizations to guarantee commercial bank loans to developing nations.

Energy Cooperation. In a most ambitious suggestion, the commission calls for an "accommodation between oil-producing and -consuming countries." Petroleum exporting nations, on their side, would guarantee levels of production and avoid sudden, large price increases. In return, the developed countries would commit themselves to a stiff conservation program and agree to index the price of oil to the real value of a group of strong currencies. The report also urges an all-out program to discover new oil and gas deposits in Third World countries.

Food. The commission proposes an intensive program to increase food production in the South. An additional $8 billion a year in agricultural development aid would be spent, and meager world emergency food stocks should be in creased from 350,000 tons to as much as 750,000 tons.

Economic Reform. The group proposes the creation of a new international financial institution where the poor countries would have a stronger voice in bankrolling further development. Brandt calls for the establishment of an international tax, perhaps on trade or arms shipments, with the proceeds going to the poorer nations. The troubled world money system should be reformed to restore greater stability among the leading currencies.

The full Brandt commission recommendations for the 1980s and '90s are a combination of the ambitious and realistic plus the romantic and unpractical. The report correctly points out that nations spend $450 billion a year on arms but only $20 billion annually on official development aid. But Brandt's suggested tax on the export of war materiel is likely to be as quickly forgotten as the 1928 Kellogg-Briand treaty outlawing all wars. The commission rightly points out the past weakness of United Nations organizations in dealing with North-South problems but then proposes a new U.N. agency that would coordinate all the other bodies. This unfortunately would result in another set of well-paid international civil servants jetting around the world conducting still more studies and holding still more meetings. The money might be better spent on aid projects themselves rather than on studies and discussions about aid projects.

But the Brandt commission hits several targets accurately. Its proposal for an organized dialogue between oil producers and oil consumers could be one small step for mankind. The run-up in petroleum prices has now got so out of control that it is harming both OPEC and the industrialized countries. Higher oil prices cause more global inflation, which in turn wipes out much of the real earnings from higher priced oil. The OPEC countries have interests beyond these self-defeating price rises, such as guaranteeing their investments in the West and speeding their own modernization. The goals of the oil producers and the oil consumers would best be treated together.

The Brandt report wisely criticizes rich nations for erecting trade barriers against the developing world's new exports, such as shoes, TV sets and clothing. Most poor nations can escape from poverty only if they can find buyers for some of their manufactured products as well as their commodities. The report states bluntly: "A key problem, which has to be solved if long-term world growth is to reach and stay at higher levels, is that of access to Northern markets for the South's manufactures."

The most significant shortcoming in the Brandt commission treatment of North-South relations, however, is its limited attention paid to the role of the private sector. The report looks to government rather than to individual initiative to solve the problems of development. The study calls the establishment of "efficient planning" one of the most important tasks of poor countries and urges taxes on capital gains.

Thus while the commission would build up the new class of bureaucrats, it virtually ignores the crucial need for an entrepreneurial class. Yet the past decade's development success stories in Brazil, Hong Kong, South Korea, the Ivory Coast and many other advanced developing nations have shown the importance of private sector initiative and profits in motivating economic takeoff.

Unlike many studies of North-South problems, the report does not try to win support for Third World development on the basis of charity or the "white man's burden." The Brandt commission argues strict mutual interest. The economic travails of the past decade have shown the interdependence of nations. Stagnation in the developing world results in reduced imports of machinery and food from the industrialized countries. Slow growth in the North likewise can be devastating for economies in the South. Says the report: "The world economy is now functioning so badly that it damages both the immediate and the longer-run interests of all nations. The search for solutions is not an act of benevolence but a condition of mutual survival." Both peace and continued prosperity in the industrialized nations will depend on success in developing the Third World.

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