The Struggle for the Third World

I

If we survey the relations of the rich and poor countries not over the last two to three years but over the last twenty to thirty years, there is no doubt about the magnitude of the changes. That may be a platitude, but it is necessary to say it in order to put the apparent setbacks or stagnation since 1975 into perspective. By seizing the initiative at the first United Nations Conference on Trade and Development in 1964 the developing countries put the Third World on the map, and the rich nations are not going to be allowed to forget its existence.

Thirty years ago no one was visibly concerned about the plight of the world’s poor. It was almost as though it was accepted as ordained by divine providence. At Bretton Woods the needs and interests of the underdeveloped peoples were notoriously ignored, and Asia and Africa figured scarcely at all in the postwar planning of Roosevelt, Churchill, and Stalin, except that it was assumed that China would take Japan’s place as the leading power in the Far East. It is only necessary to compare the declaration issued at the close of the Bonn summit conference last July to see the difference. Here, out of a total of thirty-one numbered paragraphs, no less than six refer directly, and a further five indirectly, to the need “to help” and to work “even more closely” with the developing countries.¹

But it is precisely at this point that doubt creeps in. As one correspondent put it, “a gesture towards the developing world is nearly always made by the industrialized countries when meeting to discuss the problems of the world economy.”² The first question anyone reading the Bonn declaration in detail will ask is how its protestations of good will are going to be implemented in practice; and here it has to be said that concrete proposals are singularly vague. Meanwhile, it is perhaps significant, in view of President Carter’s explicit commitment to launching an attack on world hunger, that an attempt by a group of doctors and scientists to set up an International Disaster Institute to help countries faced by earthquakes, drought, flood, and other calamities has collapsed through lack of support.³ This is perhaps a practical touchstone of Western concern.

Much has been made of President Carter’s human rights policy, and it is easy to see the attractions of a foreign policy grounded in compassion and morality for Americans still smarting under the revelations of Watergate and Vietnam, the invasion of Santo Domingo, and the counterrevolution in Chile. There is no doubt that the initiative of Congress in tying aid to minimal standards of human rights performance is popular. But before we conclude that the leopard has finally changed his spots, it might be well to take a look at recent, and not so recent, happenings in Zaire. It is here, as I suggested earlier,⁴ that we come face to face with the realities of so-called “North-South relations,” and anyone who takes a hard look at what has been happening there may wonder whether the new emphasis on human rights is not public relations at best, or face-saving at worst.

Any full consideration of the troubles in the Congo (is it not time to drop Mobutu’s strange vocabulary, seeing we are going very soon to have to drop Mobutu himself?) would take us back beyond Mobutu’s seizure of power (with Western connivance) in 1965 to the involvement of the Kennedy administration in 1961, and, indeed, beyond that to the Belgian-inspired secession of Katanga under Moïse Tshombe and the murder of Patrice Lumumba. It would also have to take account of the interests of the great international mineral corporations, Union Minière, Tanganyika Concessions, and the Anglo-American Corporation, with their interlocking shareholdings and their lobbies in Westminster and Washington, the latter led by Senator Thomas Dodd of Connecticut and “handsomely financed by European mining interests.”⁵

Any such survey is clearly out of the question, but we shall not understand the events of 1978 if we sever them from their historical background. Nor, it may be added, shall we do so if we try to fit them into a simple “New Left” pattern of an international neo-colonialist conspiracy. Actually, the story is extremely complex, though that does not, perhaps, make much difference to the final verdict.

The complexities were already visible in 1961 when Kennedy entered on the scene. Kennedy had essentially two choices. The one was to support his NATO allies (Great Britain, France, and Belgium) who were backing the Katangan secessionists. The other was to line up the United States behind the UN, which was committed to maintaining a united Congo under the central government in Léopoldville.

Kennedy decided to plump for the latter, resisting pro-Tshombe pressure groups in the Senate and Congress, for essentially the same reason as Carter supported Mobutu last May. This was the fear, real or assumed, that the secession of Katanga would result in the disruption of the whole country and open the door to Soviet penetration. It was a story we would hear again, with slight variations, in 1978.

But maintaining the central government meant finding a personality who commanded respect and support within the country, and this was the problem. It could not be a member of Lumumba’s party, the Mouvement national congolais, although this was evidently the most popular and widely based, because Lumumba, never more than barely tolerated by the Western powers, had forfeited the little Western support he had when—unable to secure help from the United States or even from the United Nations against the Katangan rebels—he had turned to the Soviet Union. Soviet assistance was, in fact, limited in scale; but henceforward the MNC was tarred with the communist brush and anathema in the West.

It followed that any Congolese leader to whom the West, and particularly Washington, gave support would have to be anti-Lumumbist, and that, it quickly became evident, meant unpopular with the majority of Congolese. Hence the succession (so reminiscent of Vietnam) of a series of second- and third-rate politicians—Kasavubu, Adoula, and the rest—all kept going by American money, until finally (an almost incredible attempt at a nonsolution) Tshombe was recalled from exile in Rhodesia, only to be ousted a few months later by Mobutu, a former sergeant in the Belgian force publique.

Mobutu was, or looked like, the strong man the West needed. It was an illusion. It is true that Mobutu rode high for a few years, partly on sheer war-weariness, but still more on the commodities boom which raised copper prices to a peak in 1974. He also attempted to popularize his dictatorship, not merely by devices such as the Africanization of place names but also by the nationalization of foreign enterprises—a process which did not worry the great mining corporations, well aware of the hazards of the extractive industry, so long as they retained (as they did) the lucrative business of processing and merchanting. But nothing was done to replace European technicians and managers by Africans, and little if any of the profits of the good years were reinvested in the economy. Instead, Mobutu borrowed heavily from the international banks—which apparently could not believe that the copper boom was ephemeral—until by 1977 Zaire (as the Congo was now called) was to all intents bankrupt.

Zaire under Mobutu was, and is, a classical example of how a developing country should not develop. It is also a country seething with discontent, though the discontent was kept under for a time by brutal military repression.

The causes of the unrest are many, but they are certainly partly economic. A rational development strategy would have ensured that some at least of the profits of the copper boom were invested in rural improvement. Needless to say, Mobutu did nothing of the sort, and the result is an impoverished peasantry, whose hostility to the regime, visible to them mainly in the person of the tax-gatherer, needs no explanation.

In addition, there is the persistence of tribalism, due not least to the government’s failure to develop an adequate network of communications and thus to break down the isolation of different regions. This is the factor on which Western comment lays most stress, and it is certainly not entirely wrong. There is no doubt, for example, that the Lunda in the south feel themselves discriminated against under Mobutu, a member of the Ngabandi tribe from the Equator province in the north. But there is also a political factor, visible ever since the Mulele and Simba uprisings in 1963, which Western emphasis on tribalism tends—can it be deliberately?—to play down.

From 1963 onward, after the formation of the Committee of National Liberation, the center of resistance was in the east where Lumumba’s main body of support had lain, and, whatever other strands may have been present, there seems no doubt whatever that the rebels were imbued with Lumumba’s fiercely nationalist and anticolonialist spirit. ⁶ There is no doubt, either, that their policies found resonance in other regions, and by 1964 large parts of the Léopoldville and Equator provinces, and of Kivu, Kasai, and Katanga, comprising over half the country, were in their hands.⁷

It was this situation that galvanized the West into action. Tshombe was recalled from exile, white mercenaries were recruited (most of the Congolese troops in the Eastern province having gone over, like those in Kolwezi in 1978, to the nationalist cause), and Belgian parachute troops in American aircraft from British bases were dropped on Stanleyville. As in 1978, this was alleged to be a “purely humanitarian” mission to rescue white hostages. But it “turned out” (to use the innocuous language of The New York Times) that it was “closely coordinated” with the advance of a Congolese army column under the command (have you guessed?) of Joseph Mobutu.⁸ These troops then went on a rampage which, even in a continent which boasts Adi Amin among its exemplars, would be hard to parallel—except in Mobutu’s Zaire.

The taste for blood which Mobutu acquired in 1964 has never left him. Nor, apparently, has he forfeited the West’s confidence in his ability to make the Congo safe for Western capital. His popularity is evidenced by the fact that there are at least 200,000 Lunda refugees—and no one knows how many thousands of others—living in Angola and Zambia, and elsewhere.⁹ His continuing bloodthirstiness is evidenced by the massacre in January this year of between 700 and 1,000 villagers—men, women, and children—in the Bandundu province, the seat of the Mulele revolt in 1963 and 1964, where hostility to Mobutu has never abated.¹⁰

The uprising in Bandundu province is in some ways more noteworthy than the more publicized invasions of Katanga last year and this. The “significant thing” about it, a Western diplomat is reported to have said, is that it was neither simply a religious protest nor a tribal revolt, but that it was “a political gesture against the government.”¹¹ And another commentator observed that Mobutu “is now so evidently hated by his own people—a fact that can be verified in any street-corner conversation in the capital—that political reality has been brushed aside.”¹² Except, naturally, in Washington, where it never reigned. Here President Carter’s press secretary, Jody Powell, proclaimed—scarcely without presidential approval—that one of the world’s most obnoxious regimes is “a moderate government.”¹³ His words recall those of the congressman, back in the 1950s, who described another brutal executioner, General Franco, as a “very lovely and lovable character.”

The latest news on the Congolese front is that Mobutu is to receive $1 billion from a group of large international banks, headed by Citibank, “to shore up his shaky regime,” provided that he agrees—and why should he not?—to put the economy “under IMF management.”¹⁴ This was the decision of an eleven-nation commission, including France, Belgium, the United States, and the United Kingdom, in spite of the fact that the British government, according to the British foreign secretary, considers that “no technical or financial aid” should be given to “corrupt or totalitarian regimes.”¹⁵

II

Some readers, the young and the cynical, will say that all this is obvious enough, and that it was not necessary to make a long digression into the affairs of Zaire to prove what we already knew. Perhaps they are right. But it is also important, since so much prominence has been given to the alleged new turn in American foreign policy, to see that President Carter’s actions are not very different from those of Kennedy, Johnson, and Nixon, when important economic and strategic interests are involved. Human rights are a useful instrument from time to time for tweaking the Soviet lion’s tail, and in marginal cases, where little is at stake—such as the temporary US Export-Import Bank refusal to authorize a loan of $270 million or a little more to Argentina—the policies of the Carter administration may perhaps succeed in mitigating some of the worst excesses of repressive military dictatorships.¹⁶ But the position is apparently different when it is a question of safeguarding the human rights and welfare of twenty million oppressed and impoverished African tribesmen in Zaire.

That is one reason why the lesson of Zaire will not be lost on other African and non-African developing countries. When the idea was broached of an African peacekeeping force, to make Katanga safe for Europeans, it met with stony silence. Nigeria, which had made serious efforts to mediate during the invasion of Katanga in 1977, refused to become involved, and the only response came from two or three minor French satellites (Senegal, Gabon, Morocco), always obedient to their master’s voice.¹⁷ The result is that France and Belgium, in spite of promises to withdraw their troops once the evacuation of Europeans was completed, have apparently decided to keep some of their forces there indefinitely, the reason being that this is the only way to prevent the hated Mobutu tyranny from collapsing.¹⁸

Times may have changed since 1964—though personally I would say not much—but, as a well-informed English correspondent put it, “African memories are long,” and what they see and resent is “African weakness in the face of Western power.”¹⁹ This, no doubt, was what President Nyerere of Tanzania had in mind when he said that the “danger to Africa’s freedom” came not from the Soviet Union or Cuba but “from nations in the Western bloc.”²⁰ It is impossible to know how far, if at all, Nyerere’s view is representative of African opinion; but it is significant that General Obasanjo, the Nigerian head of state, who is usually regarded as a “moderate” in African affairs, was scarcely less critical of Western “neocolonialism.” While issuing a warning to the Soviet Union and Cuba not to “overstay their welcome” in Africa, he simultaneously denounced “operations purposely mounted to protect foreign interests” and “any collective security scheme for Africa fashioned and guided from outside.”²¹ In the context of the French paratroop operation in Zaire and the proposed French-organized security force, the implication of his words is unmistakable.

The lesson other developing countries draw is likely to be more generalized, but not essentially different. It is, in the words of Carlos Díaz-Alejandro, that they had better not “sit around waiting for the arrival of understanding Northern governments and knights in white armor.”²² Only “steady pressure” and “the build-up of self-reliant bargaining strength”—in other words, solidarity and a common front—will get them anywhere at all. What is less clear is whether the developing countries can muster these qualities on a sufficient scale to make much difference.

The story of Zaire reinforces once again the old historical lesson that powerful nations “very seldom…let concern for the poor and oppressed…determine their major long-term policies.”²³ Where their vital interests—in this case cobalt and copper—are at stake, they will fight for them as ruthlessly as their nineteenth-century predecessors, and though we are told that the days of gunboat diplomacy are over, those of paratroop diplomacy certainly are not. ²⁴

The case of Zaire also illustrates another aspect of “North-South relations” of which, no doubt, there are more striking examples. This is the existence of client states, which can be relied upon in any confrontation to support the position of the industrial nation on which they depend. It was no accident, for example, at the recent meeting of the Organization of African Unity, that Zaire and Mauritania, both countries whose governments are only kept going by the aid of French troops, came out strongly in defense of French interference in Africa.²⁵ So long as there are dictators such as Mobutu, whose very existence depends on the good will, if not the bayonets, of the rich countries, there are effective limits to Third World solidarity.

But the recent events in Zaire, if they point to the divisions, conflicting interests, and potential defections in the Third World camp, also point to another characteristic feature of the current world situation, and that is the divisions and rivalries among the rich industrial countries. In retrospect, no aspect of the whole series of events in the Congo, from the invasion by the National Liberation Front to the reoccupation of Kolwezi by French paratroopers, was more significant than the rift between France and Belgium which it immediately brought into the open.

From the start Belgian officials and businessmen made no bones about their suspicion of French motives. France, they claimed, was “trying to forge special links with mineral producers everywhere,” and French intervention in Katanga, under the guise of humanitarianism, was really a pretext for expanding its influence, squeezing out Belgian business interests—notably the big Belgian-Zairian conglomerate Gecomines—and replacing them by French mining companies, such as Pennaroya.²⁶ In the event, the conflict was patched over, with British and American help, and a common Western front established; but while it lasted, it revealed, like a flash of lightning, the undercurrent of rivalry and conflict dividing the industrial nations, as they maneuver for leverage and access to raw materials and markets in the Third World.

The struggle for the Third World reaches back to the early 1960s, when the newly fledged European Community was bracing itself to challenge American hegemony. Its symbol was the Yaoundé Convention, signed in July 1963, which set up close economic ties between the EEC and eighteen African states formerly linked to France, Belgium, and Italy. ²⁷ But the real impetus came in 1973, in the wake of the severe recession which followed the Yom Kippur war. As a consequence of the slowdown in world economic growth and the intensification of industrial rivalry, no country (as Mary Kaldor puts it in her recent book) could “afford to neglect” even “marginal markets.”²⁸

In point of fact, by this time Third World markets were no longer marginal. In 1975 the non-OPEC developing countries took a larger share of US exports than the whole of the EEC, Eastern European and the Soviet Union combined.²⁹ The dependence of the EEC and Japan on trade with the developing countries was even greater. As early as 1970, they accounted for no less than 43 percent of Japanese exports, and today some 40 percent of EEC exports go to Third World countries. ³⁰ With a stagnant world economy and shrinking investment opportunities, the struggle for the Third World has thus become a major factor in world politics.

It is a many-sided struggle which defies easy classification. If the most obvious feature is the conflict of interests between Western Europe and the United States, a similar conflict within the EEC divides Great Britain and France. This emerged into the open in 1975 when Giscard d’Estaing put forward a plan for a “Latin African” bloc, tied to the French monetary system, in opposition to the English-speaking African countries.³¹ Giscard’s object was clearly to make France the dominant power in Africa before the British, following their entry into the EEC, could challenge the influential position France had built up through the Yaoundé Convention.

At the same time the Common Market was engaged in talks with the Arab countries—in particular Egypt, Lebanon, Syria, and Jordan—for trade preferences, and was forging links with Mediterranean countries outside the EEC, such as Spain, Portugal, Greece, and Turkey.³² The object was to create a Mediterranean free trade area, including North Africa, which—as Washington immediately perceived—would virtually close the market to American exports.³³ The effects of the Lomé Convention, negotiated in 1975 to replace the Yaoundé Convention, were similar. Here again a preferential trading zone was set up, which now comprised forty-six African, Caribbean, and Pacific developing countries and was tied to the enlarged EEC by reciprocal trade preferences and an aid program operating through the European Development Fund.³⁴

Here were all the makings of a trade war, in which the protagonists were the EEC and the United States, with Japan waiting in the wings to intervene, if and when its interests were jeopardized. The United States’ response to the growing European influence in the Third World was to threaten any developing country which offered reverse preferences to the European countries (as provided for in the EEC agreements) with exclusion from its own general preference scheme.³⁵ Its other weapon was to cut off US economic and military assistance. This it did in 1967 when Peru decided to purchase Mirage aircraft from France; but the threat did not deter Argentina, Brazil, Colombia, and Venezuela from concluding similar deals.³⁶

Thus the trade war spread to Latin America, traditionally a United States preserve, helped by the determination of most Latin American countries to free themselves from a dependence which, as Douglas Evans has pointed out, too often meant buying disadvantageously in the most expensive market.³⁷ Even before 1970, when the Declaration of Buenos Aires called for closer links between Latin America and Europe, Italy, Germany, and France were breaking into the Latin American market as competitors with the United States.³⁸ So also was Japan, with heavy investments in Brazil, Venezuela, Argentina, and Peru.³⁹

In the case of Latin America, United States’ reactions were tougher and more direct. In Argentina a military coup unseated the Peronist government, which had taken the initiative in seeking closer relations with Europe. In Chile, Allende was ousted with direct US connivance. Peru was brought to heel by the IMF, which compelled it to abandon its policies of self-reliance, and right-wing coups in Bolivia and Uruguay brought these countries into line also. The result was seen in the virtual collapse of the Andean Common Market, the most successful of the regional groupings by which the Latin American countries had sought to strengthen their bargaining power against the United States and North American multinational corporations.⁴⁰ Chile, under Allende, had actively supported the Andean Pact. In 1975, after a year of argument and recrimination, the military junta which had replaced him with US support withdrew from the Pact, and the country was again thrown wide open to United States business and investment.⁴¹

In spite of the fierce United States backlash, the challenge to its jealously guarded economic hegemony in Latin America remains strong. But by 1978 there were other factors intensifying the atmosphere of competition. One was the arrival on the scene of newly emerging “semi-industrialized” or middle-range countries, such as Brazil, which also had to find outlets for their surplus industrial capacity. In 1978 Brazil launched an all-out drive to increase its trade in the Middle East and Africa.⁴² This inevitably brought it into competition with the EEC, particularly with France, which already by 1972 was the largest exporter of industrial equipment to the Arab world and was engaged on a concerted campaign to supply capital goods to Iran and other major Middle East oil-producing countries.⁴³

The second factor was the increasingly acrimonious dispute between Japan, the United States, and the EEC over Japanese export surpluses, and insistent European and American pressure for restrictions on Japanese exports. These disputes are perhaps the most prominent feature of the current disarray, and one result has been to turn Japanese attention to alternative outlets, particularly in Southeast Asia.⁴⁴ If Japan is to compensate for the closing, or at least for the freezing, of European markets, it is here that its opportunities lie.

It can count on a sympathetic audience. For one thing, the so-called “Common Agricultural Policy” of the EEC—which means, in effect, a protective barrier for inefficient French producers and is one of the main bones of contention between the EEC and the United States—was a body blow to Australia and New Zealand. Following the British entry into the Common Market, both countries were given five years, until 1978, to cut down, if not actually eliminate, their traditional exports of relatively cheap farm produce (butter, cheese, meat) to the United Kingdom.⁴⁵ One might wonder how any British government, even that of the egregious Edward Heath, would lend its name to so disadvantageous a deal. In any case, the result was to build up resentment, which erupted last April when the Australian prime minister, Malcolm Fraser, denounced the EEC as “a narrow self-interested trading group trying to make the world dance to its tune.”⁴⁶

At the same time Australia and New Zealand drew closer to the Association of Southeast Asian Nations (ASEAN), which also were suffering from the growing wave of protectionism in Europe and the United States.⁴⁷ By 1978 discriminatory restrictions on textile imports, in flagrant contradiction of the principles of the General Agreement on Tariffs and Trade (GATT), were provoking bitter reactions throughout the region. The Common Market, the chairman of the Hong Kong Cotton Spinners’ Association said, was imposing its will on its “weaker trading partners” by force, and at the ASEAN Trade Fair in Manila President Marcos called upon the ASEAN group to “look within itself to absorb the market displacement” caused by “protectionism in the region’s traditional trading partners” and to “search aggressively for new markets.”⁴⁸

Even more serious in its implications was the hostility of the United States and the EEC to the efforts of developing countries to reduce their dependence on light industry and build up their investment in capital goods, particularly steel and shipbuilding. By 1978, at a time when world shipbuilding was in the throes of a prolonged slump, Third World shipbuilders, South Korea among others, were winning 30 percent of new orders.⁴⁹ The hostile reaction of the United States and Western Europe to this “threat” and to the parallel threat from Third World steel, was noted in an earlier article.⁵⁰ It also had the result of widening the already existing discord among the industrial countries, Japan in particular declining to participate in a proposed regulatory organization because of its belief that “any such body would simply be used by Western ship-building nations to attack developing countries’ industrial policies.”⁵¹

Underlying this Japanese reaction is the fact that the Western attempt to clamp down on Third World industrialization also indirectly affects Japan, already hit by the severe import restrictions imposed by the United States, Great Britain, and other European countries. The implications for Japan of the American plan to restrict exports of steelmaking facilities and technology from advanced nations to developing countries were spelled out last April by the Japanese Ministry of International Trade. “If realized,” it said, “the American bid would have a serious impact on Japan’s national policy to help in the industrialization efforts of developing nations.” It would also check, if not halt, Japanese exports of steel-manufacturing equipment, such as it had provided in the past for Brazil and Malaysia, was now supplying to Qatar, and the prospective assistance it hoped to extend to China.⁵²

Faced by increasing discrimination in the West, Japan has in fact embarked on a policy of taking a lead in the economic development of the ASEAN region. This was the purpose of the tour undertaken by the minister of international trade and industry at the beginning of May, during which he promised financial and technological cooperation to the Indonesian and Malaysian state-owned oil companies and the completion of a petrochemical complex in Singapore.⁵³ Hitherto Japanese investment in Southeast Asia had mainly gone to labor-intensive light industry. Now, it was announced, it would shift to “capital-intensive industries,” including steel, aluminum, and chemicals. And the whole effort would be underpinned by a $20 billion “cooperation fund,” parallel to the European Development Fund in Africa.⁵⁴

At the same time Japan has come out openly in support of the developing countries’ criticism of GATT, the IMF, and the whole economic system based upon them. This system, the president of the Japanese Federation of Employers’ Associations announced at a highlevel conference last May, “favors the advanced countries,” handicaps the industrialization of the less developed countries, and has created a situation which is simply “not acceptable.”⁵⁵ Coming from such a source, this statement, with its implicit attack on American trading policy, is extremely significant.

It also shows the direction in which Japanese policy is veering. By championing a revision of the GATT system to take account of the interests and requirements of the developing countries, Japan is evidently placing itself in a position to assume the leadership of the Third World against the West. Its efforts are concentrated, for obvious reasons, on Southeast Asia, but it is ready to lend its support to developing countries elsewhere. “We will extend economic and technical aid to the Arab oil ‘have-not’ countries,” the Japanese foreign minister declared a short time ago, announcing a plan to build a $3 billion petrochemical plant in Saudi Arabia, as well as a desalination plant and “oil refineries worth billions of dollars.” ⁵⁶

“What we are witnessing today,” Helmut Schmidt, then finance minister of the Federal Republic, wrote in 1974, is “a struggle for the world product.”⁵⁷ Subsequent events amply bear him out. When times are good, it is a struggle for raw materials; when times are bad, it is a struggle for markets. Given the level of unemployment and of unused productive capacity in the advanced industrial countries today—given also their failure, from Rambouillet in 1975 to Bonn in 1978, to reconcile their differences and take effective steps to put their own house in order—the competitive struggle to capture Third World markets is now an essential ingredient of their political strategy.

Even so, it would be a mistake to exaggerate its importance. By comparison with the insistent problems of inflation, stagnation, and unemployment, which face them at home, and the disarray of the international monetary system, the Third World still does not rank high among the priorities of Western governments. Nevertheless, this is where the action is taking place, and for that reason it is where any realistic assessment of the current state of “North-South relations” should begin.

III

If we attempt at this point to draw the threads together, the first thing to say is that they do not make a neat and tidy package. Since 1975 things have been going around in circles, not advancing in any easily recognizable direction. They have also been characterized by divergence rather than convergence. All we can safely say, on the evidence to date, is that progress in North-South relations is going to be more halting, slower, and more uneven than seemed likely three years ago—if there is any progress at all, which is certainly not assured.

It also has to be admitted that the results to date have been meager and disappointing from the point of view of the developing countries. Whatever expectations may have been aroused by the New International Economic Order, they certainly have not been fulfilled. On the other hand, we are not at the end of the road; and there is a good chance, when the failure of the policy of negotiation to produce substantive results is recognized—sooner, probably, rather than later—that the developing countries will revert to the policy of “self-reliance” which was put in cold storage in 1975. They may not do so with enthusiasm; but they will be driven to do so if, as seems probable, it is the only option left open to them.

It might be different if the West were ready to come forward with a workable alternative, but of that there is no visible sign. Hardheaded Western economists have argued with force that it is in the rich countries’ own best interest to help the poor, and in 1977 the London Economist called for a “Marshall Plan for the Third World” as the most effective means to get world trade moving again.⁵⁸ The message does not appear to have reached Washington, or Bonn, or the City of London. Even Albert Fishlow, who a couple of years ago pinned his hopes for a peaceful evolution of North-South relations on trade expansion, has apparently changed his mind and agrees that “a liberal trade regime capable of absorbing the increasingly competitive exports of manufactures from developing countries now seems more remote than ever.”⁵⁹

It might also be different if the developing countries had seriously attempted to implement the policy of “self-reliance” put forward in 1974 and 1975. Of this, unfortunately, there is little sign. There is now agreement across a wide political spectrum that the “central development problems for most LDCs are internal,”⁶⁰ or, as the Algerian minister of industry and energy has put it, that “the real solution of the development problem lies primarily in the capacity of each of the developing countries to mobilize its resources and energies.”⁶¹ Nevertheless, there is no doubt that most developing countries still rely on trade with the West and export earnings, “supplemented by financial transfers from the developed countries,” to provide “the financial resources needed for development.”⁶²

Some of the reasons for the retreat from the strategy of self-reliance have been examined in an earlier article.⁶³ In addition, it is often argued that to expect the governing elites in the developing countries to undertake fundamental reforms is like asking them to saw off the branch on which they are sitting.⁶⁴ This cynical view is perhaps exaggerated.⁶⁵ But the fact remains that the two most effective methods of mobilizing internal resources—viz. the systematic improvement of agricultural conditions and a high level of saving—require reforms which, almost certainly, could only take place at the expense of privileged, wealthy minorities.

According to Wassily Leontief’s calculations, a self-reliant development strategy would require savings amounting to between 30 and 35 percent of national income, “and in some cases up to 40 percent,” ⁶⁶ while it is hard to think of any serious measure of agricultural reform that would not adversely affect the position of wealthy landowners. Nevertheless there are few countries in Asia or Africa where real growth is possible without tackling the problem of rural poverty at its roots.⁶⁷ Perhaps the most impressive section of Arthur Lewis’s book is his exemplary demonstration of the way in which agricultural reform, by raising the productivity and disposable income of farmers and the general wage level, offers the most effective—perhaps in the long run the only effective—means of stimulating the home market and providing the necessary impetus for domestic industry.

The trouble, of course, as Fagen points out, is that such reform requires “profound changes in the developmental strategies currently in use”—and most probably in “the elites currently in power.”⁶⁸ That, no doubt, is the reason why most governing elites in the Third World prefer to operate within the existing system, and to rely on concessions from the West and on export earnings, in spite of the prospect, as Arthur Lewis has warned, that those who depend on international trade “as their major hope,” are “doomed to failure.”⁶⁹

The weakness of this development strategy is not merely the unlikelihood of its producing the desired results—as the experience of the Third World countries to date should have taught them—but also the negative reaction it is almost bound to provoke from the industrial world. Western countries, sheltering behind what we may call the Carter doctrine, are disinclined to listen to Third World demands until the developing countries have provided tangible evidence that they are taking positive steps to reduce income disparities at home. But if, incautiously, they take action, as Allende did, they may well find themselves in even worse trouble. In other words, they may find that it is a case of heads I win, tails you lose. This is also one reason why the high-level “North-South debate” at UNCTAD, GATT, CIEC, and the IMF, with the rich and poor lined up on opposite sides of the bargaining table, is so unproductive.

On the other hand, there are good reasons to question whether meetings of this sort are any longer the real testing-ground of North-South relations. It is true, of course, that they still get the limelight, when they occur. But it is also true that it is easy to exaggerate their practical importance in the world as it is constituted today. This is, perhaps, the essential difference between the present situation and the situation in 1975, and the cause of the change is the intensification of the “struggle for the Third World” which has been described above. The result of this struggle is that the focus of North-South relations has moved away from high-level confrontations, such as the Conference on International Economic Cooperation in Paris, to direct bargaining between particular countries or groups of countries. One example among many is the meeting of the EEC and the fifty-four developing countries now linked with the EEC under the Lomé Convention, which began in Brussels on July 24.⁷⁰ No doubt, such negotiations will not gain the developing countries all they want; but they can hardly be blamed, in view of the failure to make progress at a higher level, for thinking that half a loaf is better than no bread at all.

This does not mean that Third World leaders have abandoned their demand for a New International Economic Order. NIEO is a battle-cry around which they can all rally, and they are well aware that the best way to enhance their bargaining power is to maintain a common front. But it does mean that they are prepared at the same time to use all other means of leverage available to them, including direct negotiations with individual industrial nations, such as those between the ASEAN countries and Japan. That is why, contrary to the impression conveyed by so much of the literature on the subject, the North-South debate (as Howard Wriggins has pointed out) does not rank high among the priorities of Third World leaders.⁷¹ Viewed from their angle, it is one, but only one, of many means of furthering their interests, and not necessarily the most efficacious.

What all this indicates is that the conventional picture of a world divided into two competing blocs, rich and poor or “North” and “South,” is very far from a true representation of present realities. On one level, no doubt, it is not too difficult for the West—though it is certainly becoming increasingly difficult—to close its ranks and line up against the Third World at UNCTAD, GATT, and similar meetings. But for the most part relations between the rich countries and the poor countries are worked out at a lower, more pragmatic level, and here the evidence suggests that cooperation rather than confrontation is the normal attitude.

The reason, quite simply, is that under present-day conditions, the rich countries need the poor countries, or at least their markets and resources, quite as much as the poor countries need the rich.⁷² At the same time, the rivalry and competition between Western Europe, America, and Japan, which have become so marked a feature of their relations today, create opportunities for developing countries to improve their standing by bargaining with one or other of the industrial nations. There is little doubt, for example, that most countries in Southeast Asia can obtain substantial development aid from Japan, which only a few weeks ago made a loan of ten billion yen to Vietnam at an annual rate of 2.75 percent, repayable over a period of thirty years, with a ten-year period of grace.⁷³ There is no apparent reason why other developing countries in the region should not get equivalent loans on equally favorable terms.

It would, of course, be a serious mistake to ignore the fact that developing countries have to pay a price for such agreements, and in some cases it may be a stiff price. Japan, for example, when it offered financial and technical cooperation to Indonesia and Malaysia, made it quite plain that its object was to “secure a new channel of long-term, stable supply of oil.”⁷⁴ Developing countries which enter into such arrangements will, no doubt, carefully assess the pros and cons, and will not expect something for nothing.

Nevertheless, on balance it is probably true that in most instances they offer tangible advantages to the countries concerned. One of the clearest examples is the Lomé Convention of 1975. This agreement, as we have seen, granted the forty-six developing countries which signed the original convention preferential access to EEC markets; but its most novel feature—and the one which has attracted most attention—is the so-called “Stabex scheme” for stabilizing export earnings by granting compensation through a special fund when receipts from a specified list of commodities fall below an agreed level.⁷⁵ The benefits for the participants are obvious enough. In effect, the Stabex scheme means that the developing countries linked with the EEC through the Lomé Convention have enjoyed since 1975 the type of commodity agreement for which other developing countries are still fighting unsuccessfully at UNCTAD. As such, it is a powerful argument for direct negotiation.

It is also true, from the point of view of the developing countries, that it is anything but a perfect arrangement, and they have already made it plain that they intend to press for substantial improvements. ⁷⁶ In particular, the list of products covered by the Stabex scheme is too restrictive and excludes important commodities, such as sugar, rubber, and copper.⁷⁷ Nevertheless it is probably the type of agreement between industrial and developing countries of which we shall see more in the future, if only because it is easier to negotiate and less problematical than wide-ranging package deals at the United Nations or similar high-level organizations, where the complexity of the interests at play virtually precludes positive results. For the developing countries, it is a question of weighing benefits against losses, and as Douglas Evans wrote of the Yaoundé Convention, the very fact that the Yaoundé states chose to renew it in 1971 is evidence that, in their considered judgment, it was the best option open to them at the time.⁷⁸ That does not prevent them from agitating for something better, at the United Nations or elsewhere; but until something better is forthcoming, they are unlikely to forgo the advantages it offers.

IV

What all this suggests is that the relations between rich and poor countries are likely to follow a more devious and indirect route than seemed probable in 1975. The chances for the developing countries of winning serious concessions by frontal attack, as was attempted at the Seventh Special Session and at the UNCTAD meeting in Nairobi, look small. The chances of their improving their position by direct bargaining with individual Western countries, or groups of countries, look far more promising.

This is a far cry from the dramatic changes foreseen by the New International Economic Order. For anyone thinking in global terms, it is also a very imperfect solution to the problems of underdevelopment and world poverty. But global solutions are not on offer, and, though there may be exceptions, there seems to be little prospect that developing countries as a whole will opt for the alternative course of tightening their belts and relying on their own efforts. In these circumstances, it will be surprising if they do not make use of bilateral arrangements with one or other of the rival Western blocs to improve their position.

It is also probably true that such arrangements will enable a number of developing countries to secure a larger share of the world’s wealth. South Korea’s close economic links with Japan, as its main supplier of advanced technology, have undoubtedly helped it to attain its exceptional average real growth rate of 10 percent per annum over the past five years and at the same time to build its steel and shipbuilding industries.⁷⁹ The Korean experience, no doubt, is exceptional, and overall we must expect the process of amelioration to be slow, piecemeal, and uneven. But it is bound to result in some measure of redistribution, and some of this inevitably will percolate through to the working class. No one would describe South Korea under President Park Chung-Hee as a model democracy; but wages in the manufacturing industries, though still deplorably low, increased in real terms by 16 percent and 10 percent in 1976 and 1977 respectively, which was a higher rate than the increase in productivity.⁸⁰

At the same time the dangers are obvious. First of all, there is the whole complex threat of “neo-colonialism,” which has been discussed at inordinate length and needs no elaboration. It is certainly real. The simple fact is that a poor country which decides to sup with a rich country needs a very long spoon, and not all poor countries are lucky enough to have one. Zaire is a case in point.

The second danger is that special arrangements between particular developing countries, or groups of developing countries, and industrial countries, or groups of industrial countries, are bound to create tensions and divisions which may easily undermine Third World solidarity. The countries associated with the EEC through the Lomé Convention, for example, constitute only some 12 percent of the Third World population, or less than half the population of India, and the privileged access to EEC markets which they enjoy is, in effect, purchased at the expense of the other poor countries.⁸¹ A similar division, it is well known, affects the oil-rich and non-oil developing countries.⁸²

In a world divided up in this way, it is therefore pretty obvious that some poor countries will be left out in the cold, or will finish up at best in a client status, if they happen to have a place in the political or strategic calculations of one or other of the great powers. In any case, it will be a very unequal world, with some developing countries pulling ahead and others lagging behind. Some, like South Korea, will pursue a systematic policy of industrialization; more in all probability will continue, willingly or unwillingly, to fulfill their traditional role of suppliers of raw materials and tropical products to the industrialized nations.

Here again, the dangers are evident. The Western nations and Japan have encouraged the industrialization of countries such as Brazil, South Korea, and Iran in order to secure markets for their own advanced technology and capital goods; but they are now finding that in doing so they have raised up competitors and rivals. According to a recent report from the Japanese Long-Term Credit Bank, South Korea’s booming economy will soon threaten Japan’s competitive power both at home and abroad, and other industrial countries are even worse situated.⁸³ Faced with a surplus of steel and shipbuilding capacity, the Western nations are already, as we have seen, taking steps to curb Third World exports. If this is the thin end of a wedge which will get larger as the industrialization of the Third World progresses, prospects are not good.

Those with a taste for Greek tragedy may say that this is the nemesis the developing countries have brought upon themselves by choosing to follow the path of export-led growth, instead of concentrating on transforming their domestic economies. Perhaps they were right to suppose that this strategy offered them the best prospect of rapid development in the short run. In the longer term, its benefits are more problematical.

In an ideal world, no doubt, the steel mills, shipyards, and engineering and construction plants of countries such as South Korea or Brazil should be able to operate successfully by supplying the needs of the more backward underdeveloped countries, to say nothing of their own people. In the real world things are different. Because the basic reforms and structural changes necessary to enhance purchasing power and national income have been deferred, the poor countries are in no position to absorb capital goods on an adequate scale, and the result is that the newly industrialized Third World countries are forced to compete with Western industry in Western markets, with consequences that are easy to foresee. Either they will find themselves excluded by tariffs and quotas, or they will suffer severe unemployment, or more probably both. Japan and South Korea, it is already being said, are “on a collision course which could lead to an explosive trade war.”⁸⁴ If that is the case, we may be sure it will not be the only one.

The one thing that is clear at the moment—perhaps the only thing that is clear—is that the liberal world economy, as it existed for a quarter of a century after 1945, is on the way out. The charge against it, the secretary general of the United Nations has said, used to be that “it worked well for the affluent against the poor. It cannot now even be said that it works well for the affluent.”⁸⁵ What we have to expect in its place, if present trends are a reliable guide, is something approximating to a world of regional blocs or superblocs—that is to say, of exclusive trading areas, hedged in by protective tariffs, in which groups of developed and underdeveloped countries are linked together by mutual interests and stand opposed to other groups of developed and developing countries similarly linked.

There has been much speculation about the shape and composition of such regional groupings, and also about the consequences of a world organized in this way. This is too big a question to pursue in detail here and now. For people nurtured in the belief that a free open-market trading system is the best guarantee not only of prosperity but also of peace—and they are certainly still the large majority—the spread of protectionism and the formation of closed trading blocs is a recipe for trade rivalry, political rivalry, and ultimately for war. This, they assure us, with an eye on the 1930s, is the lesson of history. But the lesson of history, as so often, is less clear than those who invoke it like to think. In fact, the bloc system of the 1930s “worked relatively well,” and there is no reason why “an integrated plural system”—that is to say, a series of trading and monetary blocs linked together in a system of interlocking relationships—should not work as well today.⁸⁶

It might be different if the so-called free-market system, as it operated between 1950 and 1970, were functioning effectively, but that is manifestly not the case. As Carlos Díaz-Alejandro caustically observes, it is “bunk” to assume that “international commodity markets are of such a nature that any tinkering will necessarily reduce their efficiency” or that the international monetary system in recent years has been “an example of economic rationality.”⁸⁷ The last half-dozen years, if they have taught us anything, have taught us that the free-market economy is a good deal less than perfect, both in providing employment and as a means of distributing the world’s wealth. A regulated, regionally organized world economy may not be perfect either, but it has tangible advantages to offer, both to the developed and to the developing countries.

The cardinal disadvantage of a liberal open-market economy, with a free flow of goods and capital, is that it deprives governments of the power to manage their domestic economies in such a way as to maintain growth and employment. This is true even of such a country as Great Britain;⁸⁸ it is even more manifestly true of the poor and underdeveloped countries of Asia, Africa, and Latin America. That is why Díaz, cautiously and with many reservations, recommends a policy of “selective delinking” via import controls, tariffs, exchange controls, and the regulation of foreign investment, as “a realistic and desirable program” for most, if not perhaps for all, developing countries.⁸⁹

So far as it goes, historical experience seems to bear him out. In the 1930s countries such as Argentina, Brazil, and Colombia which “delinked” their monetary policies weathered the depression better than those that did not,⁹⁰ while, contrary to common opinion, the still largely underdeveloped countries of Eastern Europe undoubtedly benefited very considerably from participation in the German economic bloc.⁹¹ Of course, there are always losers, in the present instance the multinational corporations and international banks, whose interest it is “to keep the Third World integrated within a world system.” ⁹² But, all in all, the poor countries have more to gain than to lose from the new order which is visibly emerging in place of the defunct “Bretton Woods system.”

What a regulated, regionally organized world economy offers the developing countries, now as then, is greater stability, less exposure to the vagaries of the market place, and more assured markets for their products. It gives them an opportunity for greater autonomy in their monetary policies, more protection from disruptive forces coming from outside, and increased ability to manage their economic affairs in accordance with their own national policies and goals. These are all substantial advantages, and we may expect the poor countries to profit from them; but it is also important to add that they leave the real problems of poverty and backwardness untouched. They offer at best a more favorable environment; but in the end success or failure will depend on the efforts of the developing countries themselves. No doubt it always has; but this was never more true than today, now that it has become abundantly clear that the rich countries have no intention of tackling the question of world poverty on a systematic and concerted basis.

At the end of the account one is left with an uncomfortable feeling of frustration, of opportunities missed and challenges avoided. To begin with, it seems only too evident that polemicists such as Senator Moynihan and Professor P.T. Bauer, with their denial of Western responsibility for the plight of the poor, have won the day.⁹³ Their arguments may be specious, but they provide the sort of alibi Western governments want. As for the rest of the literature, it has unfortunately to be said that too much of it takes the form of the notorious trahison des clercs—or what, more vulgarly, is sometimes called nit-picking. That is to say, it proceeds by taking the problem of development apart, examining it piecemeal, analyzing each element separately and proving that it is misconceived or impracticable, and finally succeeds—which was the object from the beginning—in losing the real issues in a quagmire of technical argument and counterargument. That, no doubt, was what Eric Lundberg had in mind when he told an assembly of economists at MIT that they had been “too pure and simple” and had spent their time on “marginal issues.”⁹⁴ But the question of underdevelopment cannot be banished in that way. It is there staring us in the face, day in and day out, week in and week out; and it is certainly not marginal.

Like most others who have thought about the question seriously, I have no doubt that the most insistent development problems of the poor countries are internal, and it is not a bad thing that some at least of the Third World leaders are at last being forced to realize this. As Díaz rightly says, they have taken refuge too long behind the argument that “nothing can be done domestically unless the external framework is changed.”⁹⁵ But that is no reason for the West to shrug off its own responsibilities by lambasting the corruption and selfishness of oil-rich Arab sheiks and Latin American multimillionaires. Two blacks do not make a white, and the recent World Development Report of the World Bank leaves no reasonable doubt that, whatever the poor countries may achieve by their own efforts—and in any case they will have to shoulder more than 80 percent of their financial needs—only substantial aid from the rich countries can prevent the problems of poverty, starvation, unemployment, and destitution, already indescribably bad, from getting progressively worse.⁹⁶

Without a determined and whole-hearted effort by the rich countries to tackle the problem, the only conclusion we can draw from World Bank calculations is that the number of people living in “absolute poverty”—that is, without sufficient food to keep body and soul together—will rise by the end of the century from the present figure of 800 million to something between 1.3 billion and 1.7 billion.⁹⁷ People living comfortably, or even not so comfortably, in the West would do well to ponder those figures. If people are starving, “the prospect for intercontinental peace in the twenty-first century,” as Arthur Lewis mildly puts it, “is not good,”⁹⁸ and it would be foolish to suppose that the West would necessarily emerge as victor in an intercontinental war. One has only to look at recent events in Iran to see that lavish investment in sophisticated American military hardware is no guarantee against a population goaded by poverty and oppression.

And so, in the end, we come back to the question which has been assiduously swept under the carpet, ever since the plea for a New International Economic Order was raised in 1974, and that—put briefly, for we all know the facts—is the way the West, luxuriating in the enjoyment of 70 percent or so of the world’s income, has engrossed the good things of this world. That, according to the Moynihans and Bauers, if I understand them correctly, is our due, the just reward for our endeavors and achievements. Whether that is so or not, it certainly reflects a maldistribution of the world’s wealth which precludes any serious approach to the questions of underdevelopment and poverty. But my final word is that it is also a recipe for disaster—for the rich as well as for the poor. If we in the West are going to insist that we must have regular increases in our standard of living, no matter who foots the bill, if we continue to rely, as we have relied in the last thirty years, on endless growth and endless consumption as a way out of our self-induced economic problems, disaster will strike us all, rich and poor alike.

The fundamental failure of the debate about rich and poor, as it has been conducted to date by developed and developing countries alike, is that it rests upon the assumption of continuing, unlimited growth. The reality both sides have to come to terms with now is that the era of continuous growth is at an end. We may, if we wish, debate when the limit will be reached; but the span of time left to us—thirty, forty, fifty years—is less important than the ineluctable fact that we are depleting the world’s finite, nonrenewable resources at an unsupportable speed; and this is as true of the socialist as of the capitalist countries.

If Leontief is right in his calculation that before the end of the present century, at the present rate of consumption, we shall use up from three to four times the volume of mineral resources that humankind consumed during the whole previous history of civilization, our progress can only be compared with that of the Gadarene swine.⁹⁹ But if we in the West pin our hope of escaping from our economic predicaments, and they in the poorer countries pin their hope of development, on accelerated growth, every problem will be compounded, and the chances are that disaster, like a galloping consumption, will hit us sooner rather than later, and, like a galloping consumption, will strike us down with no hope of recovery.

That is why, contrary to appearances, the quest for a New International Economic Order is not dead. By that I do not mean to say that it will or should be the New International Economic Order proposed by the poor countries, for they are as committed as the governments of the West—perhaps even more committed than the governments of the West—to the idol of growth. Nevertheless the choice facing us today is a choice between a New International Economic Order and chaos indescribably worse than the world has ever experienced in the past. Whatever happens, the world of the 1980s, as Howard Wriggins so correctly predicts, is going to be “disorderly” and “messy,”¹⁰⁰ but we still have a slender chance of ensuring that it will not culminate in irretrievable disaster. That is the central issue of our generation, as we march toward the limits of growth; and it transcends the question of rich and poor, for what is at stake is the survival of us all. That may sound dramatic; unfortunately, it is a great deal closer to reality than the maneuverings for rank, position, and economic advantage which are the substance—or should I say the shadow?—of international politics today.

(This is the second part of a two-part article.)