P.M. has hopes of Aust. support

Press, 15 October 1982, Page 1

P.M. has hopes of Aust. support

By

ROY VAUGHAN,

“New Zealand Herald," in Suva

The Prime Minister of Australia. Mr Fraser, might lend his support to Mr Muldoon's moves for another Bretton Woods-type conference on reforming the world's monetary institutions.

At a press conference in Suva yesterday afternoon. Mr Muldoon s'aid that he could not disclose Australia's position at that stage because discussions were proceeding. "We had to break off today and will have further discussions tomorrow (Friday),’’ he said.

However, sources suggested the two Prime Ministers were looking at ways of linking Australian initiatives on trade protectionism with New Zealand’s desire for a world monetary conference. A number of the Commonwealth countries represented in Suva had indicated or said they would support “another Bretton Woods," said Mr Muldoon.

Many nations were already feeling the financial bite, Mexico was among the first to go, Poland is hard on its heels, and then there was Argentina, Mr Muldoon said. It would take further crisis before the big countries such as the United States came round to the idea, he said.

“New Zealand in no way is headed for this situation," Mr Muldoon said, referring to an ever-growing queue of nations joining the financial crisis list. He did not think the Suva conference of Asian and Pacific Commonwealth leaders would do much in itself to pursuade the United States of the need for an-

other Bretton Woods conterence. but said "every little helps." Unless the world had the political will to tackle its grave economic problems, the future for international co-operation was "totally pessimistic," Mr Muldoon told the Commonwealth mini-summit.

He laid down suggestions for the agenda of meetings he believed the world community should hold every 20 or 30 years to "realistically propose a fundamental reexamination of the world trade and payments systems."

Mr Muldoon’s address included criticism of the ability of the General Agreement on Tariffs and Trade to cope with the global problems and said "creeping protectionism" and the growing possibility of large-scale “financial dislocation" were the two central issues on the international economic agenda. “My purpose is primarily to see whether the political will exists to tackle the grave problems facing us," he said. "There is seldom any difficulty in reaching a common analysis of the problem. It is the next step—searching for a political remedy—that escapes them," Mr Muldoon said. Four decades after Bretton Woods they were “facing another political logjam" on the trade and payments front, said Mr Muldoon.

He said that nothing had occurred since he analysed world trade and payments problems six weeks ago at a

Commonwealth Finance Ministers meeting in London to alter his conclusion that existing institutions were not coping adequately with the nature and extent of the problems the world faced. Some of the most serious financial difficulties were being faced by some of the newly industrialising countries. "The international community has a lot riding on these countries," Mr Muldoon said. He was concerned that a number of private banks, having had their fingers burned as a result of rushing into lending operations without much thought to the ability of the borrowing country to pay them back, may begin to move sharply in the opposite direction. Mr Muldoon made several suggestions which included increasing aid flows. One approach would be a resolution by the International Monetary Fund that, for example, $30,000 million be allocated to international aid and that this sum be dispersed according to need. In a message which he hopes will set the theme for the five-day, 17-nation conference, the Commonwealth Secretary-General, Sir Shridath Ramphal, called for support for the twin initiatives of Mr Fraser and Mr Muldoon on trade and the world economy.

Foreshadowing Mr Muldoons address. Sir Shridath said the world economy was facing "a crisis of contraction."

Further report. p 6.