ECONOMIC INTELLIGENCE WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001500140041-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 15
• Document Creation Date: December 21, 2016
• Document Release Date: November 17, 2008
• Sequence Number: 41
• Publication Date: November 22, 1973
• Content Type: REPORT

Approved For Release 2008/11/17: CIA-RDP85T00875R001500140041-2 25X1
Economic Intelligence Weekly
On file Department of Agriculture release
instructions apply.
Secret
State Dept. review completed
CIA No. 7829/73
22 November 1973
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Page
US Finn Likely to Build Yugoslav Nuclear Plant
1
Cuban Sugar Harvest
1
INTERSPUTNIK Establishes Cuban Link
1
International Monetary Developments
I
Latin American Foreign Ministers' Meeting
2
Burma Solicits Bids for Offshore Oil Drilling
2
Chinese-Swiss Air Agreement
2
China Begins First Use of Container Service
2
The Arabs Sharpen Their Oil Weapon The Arabs are fine tuning
3
their oil policies by rewarding the EC for pro-Arab statements and by
putting pressure on Tokyo.
Worldwide Grain Developments
The Ceausescu Visit Romanian President Ceausescu's upcoming visit
will focus on expanding economic relations.
Chile's Austerity Program Is Causing Problems Price increases 7
threaten a general decline in the standard of living of Chile's poor.
Comparative Indicators
Recent Data Concerning Domestic and External
Economic Activity
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25X1
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ECONOMIC INTELLIGENCE WEEKLY
Notes
US Firm Likely to Build Yugoslav Nuclear Plant
Westinghouse is the odds-on choice to receive the bid.
Yugoslav Vice President Ribicic recently told the American ambassador
that the decision on awarding the contract for the $120 million to
$130 million Krsko nuclear power project would be favorable to the United
States. Westinghouse, General Electric, and a West German firm have
submitted bids to equip and supervise construction of the plant.
Cuban Sugar Harvest
The current Cuban sugar harvest is expected to reach. 5.5 million to
6.0 million tons - about the 1968-72 average. The improvement over last
year's 5.3 million tons will come largely from expanded acreage and higher
yields from earlier maturing cane plantings. Cuba's improved prospects,
combined with those for Brazil and the USSR, point to downward pressure
next year on the free market price, presently at 10.2 cents per pound.
A satellite earth station under construction at Jaruco (near Havana)
received live television broadcasts from Moscow early this month. The
station, scheduled for completion in early 1974, will be able to receive
and transmit Television, voice, and data communications. It is the first Soviet
model two-way earth station to be built outside the USSR as part of
INTERSPUTNIK, the international communications satellite organization
consisting of the USSR, Bulgaria, Cuba, Czechoslovakia, East Germany,
Hungary, Mongolia, Poland, and Romania. Other members of
INTERSPUTNIK are expected to build similar stations in the next several
years.
25X1
I International Monetary Developments
The dollar showed little net change on major foreign exchange markets
in the last week after the extraordinary gains made in early November.
Profit taking, a flurry of speculation related to the revaluation of the
Norwegian crown, and the Arab announcement that December oil cuts
would not be applied to friendly European nations all contributed to a
slight easing after the 12 November high point. Because of its underlyir.
strength, the dollar reestablished its position later in the week.
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Latin American Foreign Ministers' Meeting
The meeting in Bogota last week approved an agenda heavily weighted
with economic matters for an expected meeting in Mexico early next year
with Secretary Kissinger. The agenda includes requests for free access to
the US market under a system of general preferences, discussion of controls
on multinational enterprises, and greater access to US technology. The
Peruvian foreign minister had proposed including a discussion of the
restrictions created by the Hickenlooper Amendment to the US Foreign
Assistance Act, but the ministers reduced the topic to a call for "a
mechanism against the proposal, adoption, or application of coercive
measures of an economic nature."
Burma Solicits Bids for Offshore Oil Drilling
The government's Myanma Oil Corporation has invited 19 foreign firms
to participate by 8 December in the final bidding for offshore oil
concessions. Participants apparently include 14 US firms and 5 consortiums
representing interests in Australia, Singapore, West Germany, the United
Kingdom, and Japan. Contracts will be awarded to seven of the contenders
in January.
Chinese-Swiss Air Agreement
A civil air agreement signed on 12 November provides for Swiss air
access to Shanghai and Peking and Chinese access to Geneva and Zurich.
The Chinese are likely to begin service next spring or summer with their
Boeing 707s. Swiss Air is unlikely to begin service to China before 1975.
China Begins First Use of Container Service
China's first delivery of containerized cargo is scheduled tv arrive in
Japan in late November. Full-scale operations are planned between Japan
and China in 1974. Although this trade initially will be small, China has
expressed interest in establishing larger container operations in conjunction
with US and Japanese shipping firms.
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THE ARABS SHARPEN THEIR OIL WEAPON
The Arab oil producers, led by Saudi Arabia and Kuwait, are refining
the use of their oil weapon. Thy Organization of Arab Petroleum Exporting
Countries (OAPEC) announced on 18 November that the EC would be
exempt from December's 5% production cutback as a reward for the recent
EC resolution supporting the Arab position. OAPEC's action could also have
been intended to put additional pressure on the Japanese, who may get
a deeper cut than previously planned, to take more of a pro-Arab position.
Moreover, Saudi Minister of Petroleum Yamani has indicated that Western
Europe might be exempted from the January cutbacks if it displays a fair
attitude toward the Arabs.
Of the nine EC members, only six will be affected by the OAPEC
action. The United Kingdom and France already are on the Arabs' list of
favored countries and thus exempt from cutbacks; the Netherlands is still
embargoed. It is not clear how the Arabs will implement the one-month
exemption. Apparently, OAPEC has two choices: either raise production
above the December plan by the amount necessary to maintain exports
to the EC at the November level, or reduce the amount of oil available
to others, such as Japan, to compensate for the increased exports to the
EC. If Arab output is cut 5% in December, maintaining deliveries to the
six remaining EC members at the November level will require a shift of
180,000 b/d from other recipients. About one-half of the shift will be from
exports previously scheduled for Japan, making its December imports of
Arab oil about 2% smaller than otherwise.
As the cuts continue, Arab attempts to fine tune the oil weapon will
become more difficult, because the different Arab producers are not in
complete agreement on how the weapon should be used.
? Saudi Arabia and Kuwait apparently feel that neutral
consumers should feel the cutback, whereas Iraq, Libya, and
Algeria argue that neutrals should not suffer.
? Abu Dhabi reportedly has put Japan on its list of friendly
countries.
? Kuwait has hinted that the United Kingdom is on its list
of enemy countries because of the Balfour Declaration during
World War I.
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? Libya reportedly is making up its own list of friends on the
basis of which countries are willing to supply it with modern
arms.
Nevertheless, because Saudi Arabia produces more than 40% of Arab oil,
decisions made by this country alone will have substantial effects on
consumers even if the other roducers do not cooperate fully.
WORLDWIDE GRAIN DEVELOPMENTS
Sri Lanka's food production drive is threatened by the worldwide
fertilizer shortage. It has been unable to obtain the 40,000 tons of
nitrogenous fertilizer urgently needed in the next few weeks for its major
rice planting season. The government is asking Peking for 20,000 of the
600,000 tons of ammonium sulphate that China expects to receive from
Japan.
Africa
Emergency grain needs will remain large during 1974 in the
drought-stricken states south of the Sahara. Senegal, Chad, Mali, Mauritania,
Niger, and Upper Volta, which are largely self-sufficient in grains, with
normal rainfall, will require more than 600,000 tons. Foreign contributions
of grain to the six countries since the fall of 1972 exceed 720,000 tons,
about one-third of which came from the United States.
Poor weather in the USSR threatens next year's crop of winter grains.
Although the seeding plan was overfultilled, rain delayed seeding in the
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north, and low temperatures in some areas curtailed growth of the plants.
In late October, US agricultural attaches reported poor grain development
in the southern Ukraine and North Caucasus apparently as a result of deficit
soil moisture. These conditions will make the plants more vulnerable to
cold.
East Germany
Because East European supplies of feed were larger than expected,
East Germany resold to the original US exporter -- at a profit --
approximately 200,000 tons of corn last month. The corn was part of the
unshipped balance from an East German purchase last summer.
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Romanian President Nicole Ceausescu's visit to the United States
during 4-10 December will focus on expanding economic relations.
Ceausescu will seek assurance of eventual MFN status, more Export-Import
Bank credits, and new export outlets in the United States. He will also
meet with representatives of US firms that are doing business in Romania.
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US-Romanian trade is booming in 1973. 'I he 1972 turnover of
$100 million was surpassed in August, reflecting relaxed US credit policies.
The largest contracts this year have been for a $35 million tire plant and
$45 million in Boeing aircraft. In addition, the first US-Romanian joint
equity venture was agreed to in April. Negotiations currently pending
include:
? A $100 million sale of US helicopters
? A $52 million investment in US coal production in return
for assured deliveries of coking coal
? A number of cooperative ventures to produce machine tools,
diesel engines, and petrochemicals
Conclusion of these deals would keep trade growing rapidly through 1974.
Under Ceausescu, Romania has achieved Eastern Europe's highest
economic growth rate, won the most independence from Moscow, and
become the most dependent on Western technology. Romania's hard
currency debt is now more than $1.2 billion, presenting Ceausescu with
a serious debt-servicing problem. Without sharply increased hard currency
earnings, severe cutbacks in hard currency imports, or substantial long-term
credits, Romania will need sizable debt rescheduling by 1975. If this proves
necessary, Ceausescu probably will look first to his largest creditor (West
Germany), not his newest (the United States). For the time being, Romania
views the United States as a largely untapped source of credit and high
level technology.
CHILE'S AUSTERITY PROGRAM IS CAUSING PROBLEMS
Nearly two months of austerity under the junta is causing
dissatisfaction among the poor, who are being particularly hard hit. Chile's
cost of living jumped by 88% in October, pushing the increase to about
450% for the first 10 months of the year. By the end of the year, inflation
is expected to exceed 600%.
The rise in administered food prices to near free market levels is a
principal element in the increase of the cost of living. Although most prices
have doubled or tripled since September, prices of many foods have
increased by roughly 1,000%. The rises were intended to stimulate food
production and to end the black market in food that flourished under the
Allende regime when food prices were kept artificially low. Although
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effectively ending the black market, price rises are creating windfall profits
for many producers. It will take several months for domestic production
to respond to the new price levels.
Food price increases have weighed particularly heavily on the urban
poor. The price of food is now approaching a level that precludes a worker
on an average income from adequately feeding a family of six even if he
were to spend his entire income on food. The recent increase in the
minimum wage has not alleviated the problem significantly because of delays
and lax enforcement, and rising unemployment among the poor is
aggravating their plight.
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22 November 1973
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 EXPORTS"
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
m, Iniam
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I.".
TRADE BALANCE*
f.o.b./f.o.b.
Cumulative
Latest Month
Million US $
Million US $ 1973 1072
Sep 73
Oct 73
Sop 73
Oct 73
Oct 73
Aug 73
Aug 73
Sop 73
Oct 73
Sep 73
Oct 73
Oct 73
Aug 73
Aug 73
Sap 73
Oct 73
Sep 73
Oct 73
Oct 73
Aug 73
Aug 73
;EXTERN
0,448
3,223
0,208
3,378
2,469
1,890
1,854
60,610
28,069
48,869
30,120
23,887
13,489
15,807
35,009
22,015
34,034
21,699
18,904
11,890
12,917
Million US $ 1973 1072
R73 154 -481(1
161 3,658 7,364
1.832 11,624 6,228
-38 1,014 975
-727 -3,928 -1,324
-477 -1,584 903
-60 917 714
"a
Current and Long-Term-Capital Transactions
CONOMIC INDICATO
Percent
Change
41.1
28.1
43.0 !
39,5
25.3
13.4
22,8
Change
4 904 1:., United States
3,707 Japan
5.396 West Germany
39 France
-2,604:.' United Kingdom
-2,488 Italy
204 Canada
_^ T r T_'ri
Change
4,000
-7,183
-1 980
-357
-717
NA.!'t
-155
IMPORT PRICES
National Currency
Japan(Yen)
West Germany (Deutsche
Mark)
France (Franc) (Pound
United Kingdom Sterling)
Italy (Lire)
Canada (Dollar)
Sop 73 -0.9
Aug 73 2 9
Aug 73 - 1.1
Jun 73 0.2
Sep 73 -1.8
Jun 73 2.9
Jul 73 2.7
Sap 73
Aug 73
Aug 73
Jun 73
Sep 73
Jun 73
Jul 73
EXCHANGE RATES Spot Rate
As of 18 Nov 73
US S
Per Unit
0.0038
0.3858
0.2259
2.3860
0.0017
1.0000
-0.9
3.1
-1.9
3.8
0.5
2.5
2.8
Percent Change
Latest from Previous I Year
Month Month 1970 Earlier
Sep 73 -0.8 10.0 18.7
Aug 73 3.4 2.7 14.7
Aug 73 1.1 -0.2 2 6
Jun 73 U.6 3.1 5.6
Sep 73 5.5 14.8 41.5
Jun 73 4.6 108 24.8
Jul 73 1.5 5.2 11.8
Dec 88
29.43
53.38
11.89
-14.50
5,75
9.08
18 Dec
1971
9.98
24.27
14.73
-8.43
-1.57
0.82
2 `NGVS"/3d`3~`fi"W S't d'', vZ;G SITE 'yin, .? ~"? ~'t i; ?." i 11-i' .' , da4h W
. >gi a., h r rt ! r 7i`r,
2? ia._ r, e, /. t.,r:'; r. iA;, ?p`? rtIS, , xr'tt":tvR. ;J it ,~ e,rrkt4
'SL2`k9?va,`66,M",
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Average Annual
Growth Rate Since
19 Mar
1973
-6.10
8.90
2.50
-3.05
-4,35
0.83
3 Months
Earlier
12.7
29.0
-9.1
73
65.2
54.4
17.5
9 Nov
1973
-1.79
-0.75
-1.35
-0.60
-0.94
0.40
0
11y-t1llF tlif 1i~.~
~NrltNridi>ced
Icy trNa~tIili4l Ii
IMPORTS"
f.o.b.
Latest Month
Million US $
Million US $ 1973 1972
4,435
2,317
29,108
27,615
10,996
EXPORT PRICES
US$
EXPORT PRICES
National Currency
66.0 , Japan
Percent Changi
Leteat from Prevloue
Month Month
Percent Chengi
Latest from Previous
Month Month
Average Annual
Growth Rate Since
I Year
Leffler
32.3
33,7
Average Annual
Growth Role Since
1 Year
Earlier
13.1
3 Months
Earlier
22.8
30.3
70.2
51.5
-8.1
22.1
12,0
3 Months
Earlier
15.5
t a. + ,,r.~m~t6 ~ t7rr
~ r w e y f^t "1af T 71 ~i'^^?r 7Y;`I ei('l ml
1 Yeer 3 Modtha
End of Billion US $ Jun 1870 Earlier Earlier
1
18 Dec 19 Mar 9 Nov
Dec 68 1971 1973 1973
United States
Sep 73
14.0
16.3
13.2
14.0 y`sf
United States
-16.62
-7.22
-9.52
0.56
Japan
Oct 73
14.0
4.1
17.8
15.2 r
i-1
Japan
18.10
4.30
-7.83
-1.66
West Germany
Aug 73
37.9
88
24.6
322
West Germany
28.43
11.59
6.60
0.32
France
Sep 73
9.9
4.4
10.0
10.2
France
-11.29
1.89
-0.55
-0
37
United Kingdom
Oct 73
6.8
2.8
5 9
8
.0
'
United Kingdom
-34,33
-20.20
-5.83
.
-0.06
Ital
Se
73
6
5
4
7
8
4
0
8
r!
I
l
16
54
15
y
Canada
p
Oct 73
.
5.8
.
4.3
.
8.2
.
kkr,.,
5.8
ta
y
Canada
-
.
5.87
-
.36
-0.70
-8.54
0.94
-0.05
0.60
Million US $ 1973 1972
United States'
7311
-800
-1,700
-5,700
Japan
Aug 73
-770
-5,926
1,257
West Germany
Jul73
136
1.605
3,593
France
7311
17
-559
-202
United Kingdom
7311
-281
-1,348
-830
Italy
72 IV
800
NA.
2,983
Canada
73 !
-272
-272
-111