THE PRESS THURSDAY, OCTOBER 22, 1981. Dialogue or confrontation?

Press, 22 October 1981, Page 16

THE PRESS THURSDAY, OCTOBER 22, 1981. Dialogue or confrontation?

The summit meeting of some of the world’s richest countries and some of the world’s poorest countries in Cancun, Mexico, over the next two days is seen as a revival of the North-South dialogue. The chances are that the outcome will be a revival of the confrontation between the world’s poor countries and the world’s rich countries which was seen in the early 19705. The achievement of holding a summit meeting on the subject at. all is considerable, particularly considering the recession that much of the world is undergoing. It is true that some of those in the world’s poorest countries believe that a redistribution of the world’s wealth cannot wait, but it is unlikely that the same feeling is persuasive in some of the richer countries. They have been prone to say that the subject can wait. Nevertheless, the summit meeting is being held.

In the era of greatest confrontation between the rich and the poor countries it was difficult . for any international conference to be held without the meeting’s ending in a hostile atmosphere because the richer countries would not undertake drastic reforms of the world’s economic system. Almost always, the poorer countries sought discussion of the subject and wanted structural changes in the world’s economy to bring about ’. a redistribution of wealth. In this frequently repeated contest, the poorer countries appeared to be on the offensive and the richer countries on the defensive. The roles may be rather reversed at Cancun. While the fact that President Reagan decided ,to attend was considered something of a triumph, the reason for his acceptance is not clear. Probably no-one will be greatly surprised if it turns out that Mr Reagan thinks it as good an opportunity as he is likely to get to deliver a lecture to the poorer countries on how they should run their economies.

The emphasis at Cancun is generally agreed to be political rather than on negotiating any practical arrangements to assist the poorest countries. Thus it will-be quite different from, say, a meeting of one of the negotiating rounds of the General Agreement on Tariffs and Trade in which one country might make a demand, on another for better access to its markets, and the country, to which the appeal is directed, seeks something in return. Mr Reagan is devoted to the principles of free trade and some of the larger American companies expect to have few obstacles put in their way during his Presidency. Mr Reagan is likely to advocate a removal of any obstacles in the way of multi-national companies in the developing and poor countries, and he may argue that these countries should let foreign capital flow into their economies if companies find it attractive to invest there. Big Western firms which operate in several countries

are often efficient and innovative. They can , provide _ beneficial investment and modern technology which would otherwise be denied to more backward States.

Many people in poor and less-advanced countries acknowledge that’ vast reforms are needed, to make their economic systems more efficient. It is doubtful, however, whether they would accept that the reduction of controls on foreign companies would bring about the efficiency they need. Many of the countries have been colonised and in some instances the countries attained what unity they have in a drive towards decolonisation. They are disinclined to take steps which seem to them like a return to colonisation. Allowing free rein to multi-national companies might appear that way.

In this event, poorer countries may look in vain for investment capital and guidance in management unless these are offered by way of direct grants and assistance, or very cheap loans from richer countries. Such,support might come from international agencies if they are supplied with the necessary finance;, it might come from the wealth of the oil-producing countries or from the Communist bloc.

’ The poorer countries may not welcome American enthusiasm for private investment, even though every country can make its own rules to control the nature and administration of the investment. They may, however, welcome any proposal by Mr Reagan for minimal barriers to trade. Unless developing countries can trade more freely with the rest of the world, their chances will be poor for earning foreign exchange with which to buy more productive capacity, to improve their transport systems, to buy energy to relieve the strain on manpower or to invest in more productive agriculture as a base for other developments.

Some poor countries simply need the means to buy more food „to sustain an enfeebled population .while essential changes are made to ' enrich their capability to produce more for themselves, let alone for export earnings. The conference will have to consider many more matters than multi-national investment if it is to come to grips with the disparities between the very poor and the rest of the world.

The Cancun meeting may produce positive results if it does not get bogged down in a division between those who favour Mr Reagan’s approach to world problems and those who are opposed to it. Mr Reagan has not so far demonstrated much flexibility; the ideological differences at Cancun may cause as much bitterness as the differences in the distribution of the world’s wealth. In view of the urgent need among the poorest countries, the chance of this happening has to be taken.