INTERNATIONAL ISSUES MONTHLY REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00912A002300010017-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 27
• Document Creation Date: December 20, 2016
• Document Release Date: May 24, 2006
• Sequence Number: 17
• Publication Date: April 26, 1978
• Content Type: REPORT

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Assessment
Center
International Issues
Monthly Review
26 April 1978
State Dept. review completed
Secret
Secret
RP IIMR 78-004
26 April 1978
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INTERNATIONAL ISSUES MONTHLY REVIEW
26 April 1978
CONTENTS
NORTH-SOUTH DIALOGUE
DEVELOPING COUNTRY VIEWS ON TECHNOLOGY ISSUES . . . .
Technology issues are an integral part of LDC
demands for a New International Economic Order.
This paper examines the origins, character, and
political implications of LDC perspectives on
technology issues.
POSITIVE OUTCOME OF UNCTAD DEBT TALKS:
IMPLICATIONS FOR NORTH-SOUTH RELATIONS . . . . . 7
This article examines the factors that helped to
bring about the compromise accord on LDC debt
problems at the recent UNCTAD Trade and Develop-
ment Board meeting and thus appear to have
strengthened the trend toward accommodation on
North-South issues between LDCs and industri-
alized countries.
ARMS TRANSFERS
INDIVIDUAL LDC PERSPECTIVES ON CONVENTIONAL ARMS
TRANSFER RESTRAINTS (II): IRAN AND PERU . . . .14
This article continues the series on LDC attitudes
toward conventional arms transfer (CAT) restraints
that was begun in the January and February issue
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of International Issues Monthly Review. The views
of Iran and Peru on CAT restraints differ, largely
because of their divergent prospects for buying
more arms in the near future.
ENERGY/NUCLEAR PROLIFERATION
Denmark is representative of the small, energy-poor
industrial democracies that hope the US-sponsored
International Nuclear Fuel Cycle Evaluation will
speed development of alternative energy sources and
resolve the sensitive issue of nuclear waste dis-
posal.
This publication is prepared by the International Issues Division, Office of Regional
and Political Analysis, with occasional contributions from other offices within the
National Foreign Assessment Center. The views presented are the best judgments of
individual analysts who are aware that many of the issues they discuss are subject to
alternative interpretation. Comments and queries are welcome. They should be
directed to the authors of the individual articles.
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Developing Country Views on Technology Issues
Technology issues are an integral part of the devel-
oping countries' demands for a New International Economic
Order (NIEO) and are receiving increasing attention from
the LDCs. The developing nations expect that interna-
tional scientific and technological cooperation will re-
duce inequalities in wealth and economic opportunity
among nations. In particular, the LDCs' determination
to concentrate on acquiring wider access to industrial
technology as a means of achieving economic and techno-
logical independence from the industrialized nations has
significant implications for US policy planning in the
area of science and technology for development. This
paper examines the origins, character, and likely dura-
bility of the LDCs' views on technology issues.
The Manila Declaration and Programme of Action
adopted by the third ministerial meeting of the Group
of 77 in February 1976 embodies LDC interests on many
issues, including trade, commodities, debt, transfer of
technology, cooperation among developing nations, trans-
fer of real resources, promoting manufactures and semi-
manufactures in developing countries, and institutional
reform. The Declaration is the latest and most author-
itative LDC statement of NIEO objectives in a series
dating back to the nonaligned summit in Algiers (Sep-
tember 1973).* It is thus a document that represents
a set of maximum demands, designed to appeal to as many
LDCs as possible. While the interests of the LDCs vary
on individual issues, group support for the NIEO, as de-
fined by the language of the Manila Declaration, remains
high.
This was the first call for an NIEO. The Sixth Special
Session of the UN General Assembly in May 1974 first
adopted a formal program.
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Technology per se has not received the same high
level of attention in multilateral forums that trade, com-
modities, or debt have during the past two years, but it
is an important issue to LDCs and one which is receiving
increasing attention. Difficulties in reaching agreement
with industrialized nations on their proposals have led
the LDCs to focus on one issue at a time and, first, on
those that meet the needs of the majority in the short
term and stand a good chance of satisfactory resolution
through negotiation. In addition, there are major trade-
offs within the Group of 77 on issues that are important
to particular groups of countries. The commodity-produc-
ing countries, and the poorest among them in particular,
consider trade and commodities to be of immediate concern.
The poorest nations have also looked to debt relief as a
starting point for solving their particular problems.
The wealthier and more advanced nations in the Latin
American and Asian blocs have had no real interest in
either issue as formulated by the Group of 77, but have
supported them for the sake of group solidarity. These
more advanced nations, however, consider the transfer and
acquisition of technology to be critical for their devel-
opment and will expect the poorer nations to support them
on technology issues in the future.
During the next year, it is likely that the LDCs will
devote more attention to technology issues, with countries
like Brazil, Mexico, and Iran taking the lead. Although
there have been no major multilateral technology confer-
ences to match those on trade, commodities, and debt,
preparatory sessions for an UNCTAD conference on an in-
ternational code of conduct for the transfer of technol-
ogy have been held throughout the past few years. Prog-
ress on drafting a code has been slow but will probably
accelerate to meet the October 1978 conference date. In
addition, extensive preparations are under way on national
science and technology policy papers for the UN Confer-
ence on Science and Technology for Development scheduled
to meet in the fall of 1979.*
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Technology and Other NIEO Issues
The Manila Declaration divides "transfer of technol-
ogy" into several subissues and links it to such other
concerns as industrialization, improving access to markets
in industrial nations, regulating transnational corpora-
tions, and foreign financial assistance. Essentially,
the -technology issue is divided into four areas:
-- Strengthening the technological capabil-
ities of developing nations (including
devising national science and technol-
ogy policies, cooperation among LDCs,
cooperation from the developed nations,
and actions by international organiza-
tions).
-- Establishing a code of conduct for the
transfer of technology (eliminating re-
strictive and unfair business practices
and facilitating the international flow
of all forms of technology).
-- Revising the international patent (or
industrial property) system to serve the
development needs of the LDCs as expressed
in national and regional plans and policies.
-- Halting the "brain drain"--the reverse
transfer of technology from LDCs to the
industrialized nations.
The guiding principle of the LDCs is to reduce their
present state of dependence--both economic and techno-
logical--on the industrialized nations. Their underly-
ing assumption is that economic and technological inde-
pendence depends on achieving a greater degree of in-
dustrialization in order to corner larger shares of
world industrial output and markets.* The NIEO plan
advocates that the international industrial system be
*Here, technology is clearly differentiated from science.
The pattern historically in the initial stages of eco-
nomic growth has been for science to follow rather than
precede technology. The developing countries want tech-
nology and technical expertise, not science education or
research.
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restructured to promote the production and trade of
their manufactures and semimanufactures, including those
involving advanced technology.
Specifically, the NIEO calls for the industrialized
nations to provide larger amounts of bilateral and multi-
lateral economic aid* for industrializing the developing
countries, so that they might achieve a 25-percent share
in world industrial output by the year 2000.** The ac-
tivities of transnational corporations in the developing
economies are to be regulated so that the host country
can acquire control over the processing, marketing, and
distribution of its manufactures and semimanufactures.
Finally, the developing countries desire a greater share
of the world's wealth through improved access for their
manufactures to the markets of industrial countries, in-
cluding advanced socialist states.
International Cooperation: LDC Expectations
In the Manila Declaration the LDCs consider the
identification of needs and selection of appropriate
technology for strengthening their indigenous capabil-
ities to be solely a national effort. They also look
first to each other to develop "collective self-reliance"
and technological independence by exchanging information
on alternative technologies, establishing regional re-
search institutes and training programs, and helping to
implement codes of conduct for transferring technology
and preparing licensing agreements with transnational
corporations. The program of action apparently looks
for cooperation from industrialized nations solely to
provide access to technology and industrial technological
information banks and to refrain from encouraging the
"brain drain."
The LDCs encourage all industrialized nations to fulfill
their commitment to provide 0.7 percent of their GNP in
official development assistance.
*'The LDCs currently have about a 7-percent share of world
output.
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The developing nations believe that unrestricted
access to advanced technology is a "right."* Their
primary objection to the current transfer process is its
high cost, and they are suspicious of the operations of
transnational corporations as major transfer vehicles.
This is not to say that they demand all technology for
free; rather they want to increase their bargaining power
and their ability to search for and select technology
from among alternative sources and to negotiate on favor-
able terms.
In this context, many developing countries have
taken issue with what they perceive to be an attempt on
the part of the industrialized nations, and the United
States in particular, to influence their development by
controlling the selection and transfer of technology for
development.** They doubt that our "basic human needs"
approach to assistance will achieve their goal, which is
to acquire greater wealth and bargaining power in the
international system. Indeed, the LDCs are likely to be-
come increasingly disturbed by what they perceive as at-
tempts to minimize the important issues of technological
dependence and transfer.
Given this emphasis on achieving some degree of in-
dustrialization, the LDCs question the assumption being
made about meeting the "basic human needs" of the rural
poor as a means of promoting economic development. Rather,
most regard providing for the basic needs of the poor--
both urban and rural--as largely an internal problem. of
income distribution within a rapidly growing semi-indus-
trialized economy. Even those LDCs that have adopted
rural development strategies do so more from economic
necessity (to increase food production and employment)
than from any "economic rights" standpoint. And, in.
most cases, rural development is accompanied by some de-
gree of industrialization and export-oriented manufac-
turing to finance the rural programs.
*The Charter of Economic Rights and Duties of States
adopted by the UN General Assembly in 1974 proclaims the
right of every country to benefit from advances in
science and technology.
In this respect, very few LDCs have responded to US of-
fers of assistance in formulating and drafting their na-
tional papers for the UNCSTD.
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National preparations for the UN Conference on
Science and Technology for Development would tend to con-
firm the LDCs' concentration on obtaining wider access
to technology for industrialization. At the second prep-
aratory meeting (January 1978) the developing nations
insisted that the agenda of five subject areas include
industrialization, including the production of capital
goods, along with such nonindustrial subjects as food
and agriculture; natural resources including energy;
health, human settlement, and environment; and transpor-
tation and communications. The fact that the developing
countries also raised two additional substantive issues--
"obstacles" to the transfer of technology and "action-
oriented recommendations" to overcome these obstacles--
would suggest that they are not likely to modify substan-
tially their perceptions of their needs for technology to
meet development goals.
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Positive Outcome of the UNCTAD Debt Talks:
Implications for North-South Relations
A trend toward accommodation on North-South issues
between LDCs and industrialized countries has been evi-
dent for some time. This has been characterized by a
search for practical solutions through give-and-take
bargaining in the various international forums that have
been dealing with LDC demands for a New International
Economic Order. Recent North-South gatherings have been
remarkably free of the kind of open confrontation that
was commonplace during 1974-75. Even when the LDCs sus-
pended the November-December 1977 Common Fund talks be-
cause they saw little chance of pushing through their
demands, there was an absence of polemics.* This article
examines the factors that, by helping to bring about
the compromise accord on LDC debt problems at the recent
UNCTAD Trade and Development Board meeting, appear to
have strengthened the movement toward accommodation.
Debt relief became an important issue in economic
discussions between developed and developing countries
with the 1973 oil price rises and the resulting increase
in LDC debt. The Group of 77's Manila Declaration of
1976, which was developed in preparation for the fourth
session of UNCTAD in May of that year, cited debt as one
of the key issues in the North-South dialogue. The
declaration proposed the granting, on request, of auto-
matic, generalized relief from official bilateral debt
and multilateral development institution debts, as well
as commercial debts. When the LDC caucus (Group of 77)
pressed these demands at UNCTAD IV in Nairobi, they
were strongly resisted by creditor countries, who wished
to limit discussions of debt relief strictly to a case-
by-case review at creditor option and to maintain a
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clear distinction between debt relief and new commit-
ments of resources for development assistance. No
agreement was reached at UNCTAD IV, and the debt issue
was referred to the Conference on International Eco-
nomic Cooperation (CIEC), which was then under way.
When the CIEC ended in June 1977, the two sides re-
mained deadlocked, and the issue was returned to the
UNCTAD setting. Efforts by several developed countries
to divert the issue in the fall of 1977 by having the
IMF/IBRD Development Committee undertake a study of
debt were blocked by LDC opposition and by lack of sup-
port from the industrial countries. The UNCTAD Secre-
tariat, moreover, has vigorously campaigned to keep the
issue in UNCTAD.
UNCTAD Debt Relief Agreement
The compromise agreement on the relief of LDC debts
adopted by consensus at the UNCTAD Trade and Development
Board ministerial meeting held on 6-11 March in Geneva
represents a breakthrough. In contrast to the original
LDC demands for automatic, generalized relief for all
official and commercial debt, the conference resolution
is narrow in scope. It calls only for consideration
of a retroactive adjustment of terms for bilateral of-
ficial aid on a case-by-case basis.
The first section of the two-part resolution is
based on a suggestion made by UNCTAD Secretary General
Gamani Corea. It commits creditor countries to "seek
to adopt measures" that would allow the terms of past
aid loans to "poorer developing countries, particularly
the least developed among them," to be adjusted to the
easier terms of today. The donor country is to deter-
mine the "distribution and net flows involved within
the context of its own aid policy." Donor nations,
such as the US, that by statute cannot adjust debt terms
are expected to take "equivalent measures." The second
section of the resolution sets out guidelines for inter-
national action on possible future LDC debt problems,
calls for the creation of an intergovernmental group of
experts to recommend guidelines for future debt manage-
ment, and refers further review of the debt issue to
the fifth session of UNCTAD in May 1979.
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The compromise agreement represents gains and losses
for both sides, and as could be expected, reactions have
been varied. For the industrialized countries, the com-
promise resolution involved an acceptance of the validity
of the retroactive adjustment of terms as a means of in-
creasing official development aid, but it helped prevent
a possible breakdown in the fragile atmosphere of coopera-
tion in North-South relations. Members of this group
were pleased that UNCTAD was able to function on this
occasion as a forum for productive dialogue, and they
expressed unqualified enthusiasm for the outcome.
For the Group of 77, the agreement involved formally
accepting the validity of the case-by-case approach,
thereby relinquishing their demands for generalized auto-
matic relief for all official debt. It also involved a
recognition by the Group of 77 that the nature of debt
problems may vary "from acute balance of payments dif-
ficulties requiring immediate action," which had been
their sole concern, to "longer term situations relating
to structural, financial, and transfer of resources
problems requiring longer term measures." The Group of
77 had hitherto resolutely resisted this concept, insist-
ing that all their debt problems were due to external
causes; they now recognize that these may have their
origins in internal problems as well. At the same time,
the LDCs benefited, not only tangibly in that some of
the least developed countries (LLDCs) may have their
debt burden eased, but more importantly because they were
able to maintain the appearance of unity on an issue that
has been increasingly divisive. On balance, the Group of
77 was less enthusiastic about the resolution than the
industrial states, because it comprises a statement of
intention, rather than the commitment to immediate debt
relief action that they had hoped for. Most LDC dele-
gates, however, shared the attitude of the industrial
states that for the first time progress had been made in
approaching the complex set of issues related to LDC debt
and that this was a harbinger of a more positive climate
for the general North-South dialogue.
Evolution of the Modified Group of 77 Position
While the Group of 77 has consistently depicted the
debt problem as one shared by all LDCs, they are not all
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equally affected, nor do they have a common approach to
it. Some see it as a "rich against poor" ideological
issue and as an ideal way of increasing resource trans-
fers (since it is unconditional, untied, and fast-dis-
bursing). Others wish to avoid the issue of debt relief
altogether because of their concern with retaining or
establishing credit-worthiness in commercial markets.
Nonetheless, at the end of 1977, six months after
the close of CIEC, the official LDC position on debt was
almost the same as at Manila in 1976:
-- Bilateral debts of LLDCs, landlocked, and
island developing countries should be
canceled.
-- Bilateral debts of the most seriously af-
fected countries (MSAs) should be canceled
or rescheduled at lower interest rates.
-- Bilateral debts of all other LDCs should
be rescheduled if the country desires re-
lief.
-- Multilateral debts of LLDCs should be re-
scheduled at lower interest rates.
-- Multilateral debts of other LDCs should
be reviewed when international institu-
tions allocate new loans.
-- Private debts of "interested" LDCs should
be refinanced at lower interest rates
and with longer maturities by a new aid
institution.
In the weeks preceding the UNCTAD Trade and Develop-
ment Board ministerial meeting, however, it became ap-
parent that the real focus of LDC concern was relief
for the official concessional debt held by low-income
countries. Only a few countries (such as Jamaica) were
interested in commercial debt relief, and higher income
countries in Latin America and Asia, while formally sup-
porting the developing country consensus, had clearly
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disassociated themselves from demands for generalized
debt relief. Similarly, while some leading members of
the African group, such as Zaire and Nigeria, continued
to sympathize with Group of 77 calls for generalized debt
relief, they were beginning to show a preference for a.
case-by-case approach because of their increasing aware-
ness of the importance of creditworthiness. Most of the
continued pressure for official bilaterial debt relief
came, in fact, from the few low-income countries (India,
Pakistan, Bangladesh, and Egypt) who would benefit most
from such relief. Of these countries, Bangladesh be-
lieves it cannot justifiably support generalized debt
relief, because many countries less needy than Bangladesh
have higher debt loads and are likely to benefit more.
During his February 1978 visit to Washington, UNCTAD
Secretary General Corea indicated that the LDCs had con-
siderably reduced their expectations for generalized debt
relief. He reiterated his suggestion of September 1977
that creditors retroactively adjust terms of past official
debt of the LLDCs to conform with current softer terms,
thus increasing the net flow of aid to recipient countries.
Elements of Compromise
In addition to a lack of unity among the LDCs, there
were other factors that seem to have played an important
role in bringing the debt talks to a compromise solution.
One was the ability of the industrialized countries to
come to an agreed position--if only just barely--prior
to the conference, and the unity they displayed in sup-
porting that position. They introduced a resolution that
they had originally offered to the LDCs at the CIEC, but
which the LDCs rejected as inadequate. The proposal,
based on a joint US/EC position, outlined procedures for
readjusting debt terms in urgent cases. The industrial-
ized countries were also able to agree to commit them-
selves in principle to consider the idea of retroactively
adjusting terms, as long as any eventual proposal deal-
ing with such an adjustment contained an escape clause
for those countries statutorily unable to comply. They
were thus able to implement a strategy of linking ac-
ceptance of this concept to acceptance by the Group of
77 of basic concepts in the US/EC debt features paper.
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The second important factor favoring a compromise
conclusion to the debt talks was the stabilizing influ-
ence of the UNCTAD Secretariat--usually a force for
confrontation--and the resourceful diplomacy of a few
key LDCs. There was considerable dissension within the
Group of 77 during the meeting, particularly after it
became clear that the hoped-for US announcement concern-
ing cancellation of official development aid debts of
LLDCs would not be forthcoming. The Secretariat, however,
clearly wanted a successful meeting to establish UNCTAD's
effectiveness as a forum and thus counterbalance the lack
of progress in the Common Fund talks. This impulse, to-
gether with the efforts of able diplomats on the most
active and interested delegations (Pakistan, India,
Bangladesh, and particularly Egypt) helped to forestall
polemics and to lead the conference toward acceptance
of the compromise resolution.
Outlook
The ability of the UNCTAD Secretariat and the delega-
tions from the countries most affected by official con-
cessional debt relief to work together to rally the Group
of 77 to a compromise position further confirms that
during the past year or so North-South relations have
perceptibly shifted from confrontation to accommodation.
The conference resolution is also testimony to the LDCs'
acceptance of the idea that relations with the industrial
nations are evolving into a practical bargaining process.
The LDCs also show a growing sense of pragmatism about
how much multilateral negotiations with the industrialized
countries can actually achieve. They seem to acknowledge
that the New International Economic Order as presently
formulated is unrealistically demanding and probably un-
attainable and that continued insistence on it might
jeopardize attainable gains.
The productive dialogue at the conference has made
officials on both sides more optimistic about the pros-
pects for other UNCTAD negotiations. UNCTAD Secretary
General Corea described the outcome of the debt talks as
"very positive," and the readiness to compromise that
emerged within the Group of 77 leadership at Geneva seems
to have heightened his confidence that a Common Fund
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agreement may be within reach. He is currently formulat-
ing compromise proposals aimed at reopening fund negotia-
tions and has announced that he would like the talks to
resume in May or June.
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Individual LDC Perspectives on Conventional Arms Transfer
Restraints (II): Iran and Peru
This paper continues the series on LDC attitudes to-
ward conventional arms transfer (CAT) restraints that was
begun in the January and February issues of International
Issues Monthly Review. Earlier studies in the series
described LDC concerns that would complicate efforts to
gain their support for restricting the conventional arms
trade. The following sketches address two countries that
share some of these concerns and that have both spent
heavily on imported arms during the past few years.
Their views on the CAT restraint issue are judged likely
to differ, however, largely because of their divergent
prospects for further arms purchases in the near future.
Iran almost certainly sees CAT restraints as a potential
threat to its plans for additional purchases of major
weapons systems, while Peru may now favor such restraints
because it lacks both the need and the resources for con-
tinued heavy spending on arms.
Iran is the largest purchaser of arms in the non-
industrialized world. The sharp increase in the price of
oil decreed by OPEC in late 1973 gave the Shah the rev-
enues he has used to build his arsenal. In the ensuing
four years (1974-1977), Iran spent $19.3 billion on the
world arms market, mainly for advanced weapons from the
United States. The remaining orders have gone chiefly to
Western Europe and the Soviet Union.
Iran's imports of arms are unlikely to decline soon.
Oil revenues should continue at about their present level
for another 10 years, providing the means for more pur-
chases of advanced weapons systems. At the same time,
the prospect that the diminution of the country's oil re-
serves in the late 1980s may erode the economic foundation
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of Iranian influence has lent urgency to the Shah's ef-
forts to bolster the military base of his nation's power.
To this end, he has already requested from the United
States many additional military items, including elec-
tronic systems and combat and transport aircraft. The
principal arms deals Iran is now negotiating with West
European suppliers are for Dutch and West German naval
vessels.
Although Iran's relations with its neighbors can
presently be characterized as "correct," the Shah believes
that this military buildup is necessary to counter a
variety of potential threats and to maintain stability
in the region. The Shah's principal worry is the Soviet
Union. He has maintained normal economic and political
relations with the Soviets and does not now feel directly
threatened from the north, but he sees a danger of en-
circlement through Soviet influence and adventurism in
other neighboring states. To the west, Iraq continues
to appear as a potential adversary--mainly because of its
close military ties with the Soviet Union--despite a
1975 agreement between Tehran and Baghdad that removed
the Kurdish problem and the disputed river border as im-
mediate sources of conflict. To the east, Soviet influ-
ence in Afghanistan as well as instability in Pakistan
remains worrisome. To the south, the Persian Gulf and
the Strait of Hormuz are seen as vital waterways--life-
lines through which the oil flows--that would be endangered
by any radical takeover of the small Arab states along
the southern shore. The Shah demonstrated his determina-
tion to use military force to prevent any such takeover
by sending troops to Oman to help defeat the Dhofar re-
bellion.
The Shah believes that because of Iran's size and
difficult terrain, he needs large armed forces equipped
for mobility and great range. In addition, the Shah
wants Iran's naval forces to extend their reach into the
Indian Ocean as part of their mission to protect the
shipping lanes used by oil tankers. An Iranian naval
presence in the Indian Ocean would also balance any at-
tempt by India to extend its influence in the event the
US and USSR reduce their own presence in the area. The
desire to make Iran a major regional naval power lies
behind the Shah's present emphasis on purchases of war-
ships.
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In equipping its expanding military forces, Iran
will remain heavily dependent on foreign supplies for the
foreseeable future. It manufactures some small arms and
is attempting to expand this capability through coproduc-
tion agreements to include larger weapons systems. Many
of the coproduction schemes are still, however, only in
the planning stage. Furthermore, it is unlikely that the
Shah will reduce his emphasis on obtaining the most tech-
nologically advanced equipment available--the sort of
equipment whose manufacture will remain most concentrated
in the industrialized countries.
These considerations suggest that Iran will continue
to see itself as having a large stake in unrestricted
conventional arms transfers for at least the next several
years. It is unlikely, therefore, that Iran would actively
support CAT restraints. It may take the position that
restraints could be useful if they were comprehensively
applied and observed, meaning that Iraq and other radical
states in the area would not receive an unrestricted flow
of Soviet arms. Iran undoubtedly has little confidence
that such comprehensive curbs are feasible, however, and
even if they were, this would not invalidate certain
other motives for Iranian arms purchases, particularly
the desire to project power into the Indian Ocean.
Iran has generally been moderate in its dealings
with the developed world, avoiding the extreme tactics
and rhetoric of the radicals in the Group of 77. Never-
theless, in economic debates it has argued firmly in
behalf of producers of primary products. It will prob-
ably be no less timid in discussions of the arms trans-
fer issue. Iran has already attempted, in the Preparatory
Committee for the UN Special Session on Disarmament, to
amend a Western draft on CAT in a way that would emphasize
the right of recipient states to veto proposals for re-
straint.* Any push by the West, especially by the US,
to win approval for a strong endorsement of CAT restraints
would probably only increase the Shah's determination to
protect his freedom of action. He would view such an
endorsement in the same light as he views the US CAT
policy announced in 1977, that is, as discriminatory in
'Iran abstained, however, on the 1976 vote in the General
Assembly to kill a Japanese initiative on CAT restraint.
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favor of the industrialized countries and against devel-
oping nations like his own.
Peru, as one of the largest purchasers of arms in
Latin America, has not worked to institute CAT restraints.
For reasons indicated below, however, its military pur-
chases will. probably slacken in the coming months. This
suggests that, despite its past posture, Peru may now
welcome at least some forms of CAT restraints.
Since 1973, Peru has purchased approximately $1 bil-
lion worth of military equipment, about half of this from
the Soviets and the other half from Western (mainly Euro-
pean) suppliers. In 1976, Soviet arms sales to Peru were
larger than US sales to all of Latin America. Peru's
heavy military spending stemmed at least in part from
its perception of being geographically vulnerable. Of
the five states with which it shares borders, two (Chile
and Ecuador) have fought wars with Peru over disputed
territory and a third (Bolivia) covets an outlet to the
sea. Lima believes that a regional balance exists only
when its forces match or exceed those of the other three
countries combined.
As a result of its arms buildup, Peru has substan-
tially achieved this objective. It has a quantitative
superiority over some of its neighbors in many types of
ground equipment. Peru's tanks and armored personnel
carriers, for example, outnumber those of Chile, Ecuador,
and Bolivia combined. Its advanced Soviet-made equipment
has given it a qualitative edge in many areas as well.,
despite some difficulties in absorbing and maintaining
these weapons. Peru is particularly well armed for tac-
tical air support--with its purchase of 36 SU-22 fighter-
bombers from the USSR--as well as for air defense.
Having attained military superiority over a combi-
nation of its neighbors, Peru will probably forgo further
major arms purchases in the near future. Peru's financial
difficulties, specifically its large debt to overseas
creditors, is another inhibiting factor. Lima has ex-
plicitly promised, as a condition for obtaining foreign
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financial help, not to buy new weapons until 1980 (when
an elected government is scheduled to take power).*
Violating this promise would make it more difficult to
obtain new loans or extensions of present repayment
schedules. Further arms purchases on credit would also,
of course, directly increase the foreign debt. In fact,
the portion of Peru's present debt, including service
through 1985, that is attributable to military purchases
is about $1.5 billion. Lima's growing problems in making
payments have led, for example, to the recent restructur-
ing of its military debt to the USSR.
While Peru voted at the 1976 UNGA session to kill
the Japanese CAT initiative, it would probably now welcome
some CAT restraints. Peru's heavy military spending
in recent years contrasts, however, with the leading
role it took in writing the 1974 Ayacucho Declaration
on CAT restraint in Latin America, and Lima recognizes
that it would have a credibility problem were it once
again to take the initiative on CAT restraints. It will,
therefore, probably maintain a low profile in CAT de-
bates, in contrast to its usual active role as a member
of the Group of 77. Its support for CAT restraint will
principally take the form of quiet approval of regional
arms control. (Earlier this year, it privately indicated
that it favors resurrection and implementation of the
Ayacucho Declaration.) This support is fragile, however;
it could dissipate if Peru's neighbors were to augment
their own armed forces and Lima saw the need to resume
heavy arms imports to maintain its strategic position.
'*Peru has explained some recent arms purchases (such as
destroyers from the Netherlands) as not violating this
promise since they were "in the works" before the mora-
torium was declared.
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Denmark's Uncertain Road to Nuclear Power
Denmark is one of the most enthusiastic backers of
the US-sponsored International Nuclear Fuel Cycle Evalu-
ation (INFCE).* It is representative of the small, energy-
poor industrial democracies that hope INFCE will speed
up the development of alternative energy sources and re-
solve the politically sensitive issue of nuclear waste
disposal.
Denmark's energy needs are self-evident. It ranks
with Sweden as the third largest per capita user of energy
in the world; it imports 98 percent of its fossil fuel
needs. With the sharp increase in petroleum prices, Den-
mark has experienced large increases in inflation and un-
employment rates. For many years the country's policy-
makers had hoped that a substantial portion of Denmark's
long-term energy needs could be met by combining the re-
sources of its North Sea tract and the expected oil re-
serves off the western coast of Greenland, a Danish pos-
session. These hopes have gradually faded as it became
evident that Denmark's North Sea oil reserves, in con-
trast to those of Norway and Great Britain, are small.
Furthermore, efforts to develop Greenland's offshore
area have so far proven futile. Denmark's North Sea
holdings do contain significant natural gas reserves, but
the country lacks established pipelines, and there is
strong sentiment to sell the gas to West Germany to earn
much needed foreign exchange.
Despite the country's energy predicament and such
favorable factors as a relatively large number of nuclear
scientists, three research reactors, and known uranium
reserves in Greenland, the Danish Government has, until
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now, been cautious in committing the nation to the com-
mercial development of nuclear power. Party politics and
public concern over waste disposal have been the main
reason for inaction.
Later this year, however, the government plans to
propose to Parliament the construction of six commercial
nuclear reactors, although approval for the project is
as uncertain as ever. Of the 11 parties represented in
Parliament, those of the center and right are generally
sympathetic to the development of nuclear power, while
the far left parties are ambivalent, if not hostile. The
ruling Social Democratic Party (SDP), which controls
nearly 40 percent of the seats, is itself divided on the
issue. Public opinion is volatile on the matter of nu-
clear energy. Nonetheless, the opponents of the reactor
proposal, about one-third of the members of Parliament,
have threatened to seek a national referendum that could
ultimately block the program.
A key figure in the SDP energy debate is Commerce
Minister Ivar Noergaard, who represents the small, but
vocal left wing of the party. Norgaard advocates a go-
slow approach to the adoption of current nuclear tech-
nology. He favors the development of alternative sources
of energy such as solar and wind power. He apparently
hopes that the optimistic Soviet estimates of the time
needed for development of nuclear fusion technology*--10
to 15 years--will prove to be correct as opposed to the
more pessimistic estimates of Western scientists. The
Canadian proposal for the INFCE to establish a subgroup
on fusion reactor research appeals to Norgaard and his
followers. In addition, he has been able to influence
his government's budgetary priorities so that his ministry
will expend almost as much money on nonconventional
energy research as it will on nuclear development in
1979.
Faced with these circumstances, Prime Minister
Anker Joergensen is anxious to resolve the waste disposal
*Fusion technology, which involves the fusion of light
elements rather than the splitting of heavy ones, is
hoped to be more environmentally safe than fission tech-
nology.
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problem, and thus improve the chances for parliamentary
approval of the nuclear reactor program. Initially, Den-
mark had hoped to work out a bilateral arrangement with
neighboring Sweden, but these aspirations were dashed by
the defeat of Sweden's Social Democratic Party in October
1976 and the subsequent downgrading of that country's
nuclear program. President Carter's October 1977 offer
to explore and negotiate bilateral waste disposal agree-
ments with selected countries is, therefore, viewed by
the Danish Government as a solution to the problems now
facing its nuclear program. The Prime Minister believes
that by the time all of Denmark's proposed reactors be-
come operational (the year 2000), improved methods of
waste disposal will have been developed, and that this
increases the likelihood that the United States will
agree to a bilateral waste disposal accord.
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