U.S. helps N.Z. to keep bank seat

Press, Volume CXIV, Issue 33653, 1 October 1974, Page 3

U.S. helps N.Z. to keep bank seat

(N.Z.P.A. Staff Correspondent) WASHINGTON, September 30. United States intervention has headed off a potential political debacle for New Zealand and Australia at the annual meeting of the International Monetary Fund and World Bank in Washington this week.

Reliable sources say that the American Secretary of State (Dr Henry Kissinger) and the Secretary of the Treasury (Mr William Simon) late last week broke up a South African move which placed in jeopardy the position of the two Tasman nations on the twin directorates.

The two members of the American Cabinet bluntly told Spain and Turkey they would not have these countries associate with South Africa on the directorates and raised the possibility that French-speaking African nations might be forced off the boards. For as monetary officials had “read” the situation, either the African countries or Australia and New Zealand would have lost their place had South Africa succeeded in establishing the representational grouping it wanted with Spain and Turkey. Now, New Zealand and Australia seem assured of holding their place. Less prestige South Africa, “the racial pariah” of international politics, will have to take a position with less prestige in a big grouping of countries or lose its representation altogether. New Zealand looks likely to win a better situation — a.-sociated with Australia, it seems as though it will come out of the meeting with an alternate director on the I.M.F. board. This would mean that whenever the Australia representative was absent, the New Zealand man would sit in for him. It would also be much easier for New Zealand to have its man take the board seat whenever it wants to promote a point of view particularly strongly. In the pa>st Australia has

held the I.M.F. directorate seat with a South African as alternate director. New Zealand has held the World Bank board seat with an Australian as alternate. The New Zealand delegation to the meeting this week is headed by the Secretary of the Treasury (Mr Henry Lang). Means of coping with high oil prices and avoiding an international depression of 1930 s proportions dominate background discussion on the eve of the meeting. Financial experts from around the globe flocked to Washington during the week-end to consult on suggestions to deal with the economic crisis threatening global, monetary and political disorder. The atmosphere is grim, and feeling is running high that the next six months will turn out to be perhaps the toughest period of monetary turmoil with which governments have had to deal since the world’s financial structure plunged in 1970 into a regular series of crises.

“Tough talk” Stern warnings by President Ford and Dr Kissinger that oil producers should beware the consequences of holding present oil prices, or even increasing them further, are publicly regarded by political figures in Washington as simply “tough talk.” The seriousness of the situation is not “downgraded," but officials do not believe that the United States is prepared now to back the

harsh words with military action.

United States trade officials, who take an even gloomier view of the world situation than monetary experts are not so sure. They foresee extremely shaky times ahead for world trade. And they ponder whether Western Governments will be able to withstand increasing pressures to move militarily against Arab oil producers if their economies slide even closer to bankruptcy. Monetary officials hope fervently that their schemes to recycle the huge sums going into the treasuries of oil producers will restore .stability. But the worried looks they wear in Washington corridors suggest that their expressions of confidence are not as strongly based as they seek to indicate.