P.M. seeks new economic order

Press, 26 September 1980, Page 2

P.M. seeks new economic order

NZPA Hamilton, Bermuda

“How many more Turkeys do you have to have? How many more countries do - you have to see go sour?” These are the questions the Prime Minister (Mr Muldoon) is posing to Commonwealth finance ministers in Bermuda this week and will repeat at the annual meetings of the World Bank and the International Monetary Fund in Washington next week. His questions, raised during an interview, were aimed, at putting in political and military terms the arguments he is advancing in favour of world-wide recognition that a new international economic order is necessary to avoid disaster. “Turkey,” he said, referring to that country’s political collapse and military take-over, "is a classic case. How many more countries could move in a way that changes the strategic pattern? “I would have thought that even the Americans would understand that letting a situation- develop that creates political instability in countries that are geographically important is a dangerous policy.” Mr Muldoon was asked about the arguments he had put to the Commonwealth Ministers on Wednesday in suggesting a new I.M.F. system to enable the poor

nations of the world to share some of the oil producers’ wealth.

He said that many oil-im-porting countries were being forced into bankruptcy. If they could not pay their way without the onerous demands now imposed on them by the I.M.F. their governments would fall, reducing the number of democracies in the world and upsetting the strategic balance. Mr Muldoon declined to name the countries at risk but he said that they were not all the very poorest countries. Many of them were “middle income” countries or the newly industrialised. “Some of the Commonwealth countries at this conference are warning us, ‘Our position is desperate’,” he said. In an address to the Commonwealth conference on I.M.F. issues that Commonwealth Ministers will face in Washington next week, Mr Muldoon said that the oil-producing countries should join the I.M.F. in a new joint facility, under which members of the Organisation of Petroleum Exporting Countries would lend countries with major balance-of-payments . deficits funds in return for "something less than the normal commercial return on funds so invested.” A The I.M.F. should accept

part of the risk involved while watching over not only the needs of deficit nations but the “capacities, concerns, and responsibilities” of the surplus nations.

Mr Muldoon said later that the crunch would probably come next year. The effect of the huge deficits oil consumers faced was to diminish world trade.

One could not be optimistic about the outcome after past failures to find a solution to the problem but the world had to try to solve the problem now before it was too late.

Mr Muldoon’s views found widespread support in the closed conference sessions, according to sources, although countries such as Jamaica and Tanzania, both highly'critical of the 1.M.F., were doubtful about the wisdom of establishing a new “petrodollar recycling” mechanism within it.

Mr Muldoon said it was impossible to say whether the O.P.E.C. nations, would support his suggestion. “All we can do here is get a body of opinion that will have to engage in a further struggle next week,” he said. The two-day conference will end today (N.Z. time) after discussions on the world economic situation, the 1.M.F., and the World Bank.