Carter lashes out at O.P.E.C. rises

Press, 3 July 1979, Page 8

Carter lashes out at O.P.E.C. rises

NZPA-Reuter Washington President Jimmy Carter arrived home yesterday from Tokyo to face gloomy predictions for the United States economy in the wake of Arab oil price rises.

Mr Carter, who attended the Tokyo economic summit meeting, and then made a State visit to South Korea, said on his way home that rises ordered by the Organisation of Petroleum Exporting Countries "will make a recession much more likely than it was before.” He said the O.P.E.C.’s cumulative increases of 60 per cent since last December could mean the loss of 800,000 jobs in the United States. He said other possibilities were the gross national product— the total value of all goods and services produced — might drop by 2.5 percentage points and inflation, already running at 10.2 per cent, might go up by another 2.5 per cent. The President sharply criticised O.P.E.C. and said oil consuming countries had been timid in their reaction to the price rises.

“I don’t see how the rest of the world can sit back in a quiescent state and accept unrestrained and unwarranted increases in O.P.E.C. oil prices.” But he avoided saying whether the United States would do anything beyond criticising 0.P.E.C., telling reporters on the flight: *Td rather not go into that.” However, a Carter Admin-

istration official said the economic recession would be nowhere near as severe as the recession of the mid--19705. The official, who talked to reporters on the Carter plane, said he expected the worst of the recession in the second half of the year, followed by an improvement. The President accused O.P.E.C. of issuing a communique after its Geneva conference last week that “was highly inaccurate and designed obviously to mislead the developing countries.” Officials said the President was referring to O.P.E.C.’s decision to give an additional SUSBOOM to developing countries to enable them to absorb some of the latest oil price increases. But, the officials said, the added cost of the increases to the developing countries would be SBOOOM —ten times the amount of the extra payments.

President Carter expressed the view that it was very difficult for a single country, even a big country, to speak by itself because O.P.E.C. could single it out for punitive action, such as an oil embargo. The President said the seriousness of the situation could be gauged by a report

to the economic summit by West German Chancellor (Mr Helmut Schmidt) that one big North Atlantic Treaty Organisation country —which he did not identify — was spending 100 per cent of its external earnings on oil. He also said: “The devastating blow to the world is really most acutely felt in the developing nations, who have very little cash reserve and are deeply in debt.” The President disclosed that he was setting up two task forces, each including Administration officials and members of Congress, to study inflation and the energy crisis. He said he would ask the energy group to move ahead on a plan under which Congress would give him standby authority to ration petrol —a proposal that the House of Representatives defeated recently despite a drop in supplies and long queues of cars at petrol stations. He said the ordinary consumer would have to bear the brunt of the country’s energy problems.

Mr Carter will meet his White House advisers today to discuss the energy problems and the economic impact of the oil price rises.