ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Oil- Fresh Initiatives

AFTER the failure of the international conference of oil producing and consuming nations to find common meeting ground, the chances of fresh initiatives have brightened again with a sub- stantial change in the US position which had earlier proved to be the main .stumbling block. The US Secretary of State stated recently at the ministerial meeting of the 18-nation International Energy Agency that the dialogue between oil producers and consumers should be broadened to include the whole relationship between developed and developing countries. But a closer reading of Kissinger's statement indicates that he is not yet in favour of a single body to deal with all the crucial questions relating to raw materials, energy and development which the producers and developing countries were demanding at the abortive Paris conference, By backing the demands of the developing countries for fair prices for their raw material exports and for greater effective attention by the rest of the world to their developmental problems, the oil exporting countries have intelligently divided the ranks of the oil importing countries. Similarly, ploited the already existing differences among the developed countries, particularly between the US and France. Despite all the American talk of taking drastic action in the event of an oil embargo by the oil exporters, it is clear that the Americans are not very much worried over the impact of the steep rise in oil prices, at least immediately. No doubt the US has to pay the quadrupled oil prices, but it is gaining much more than that through the capital inflows into the US. Well over three-fourths of the surplus earnings of the oil exporting countries are retained in US dollars either in the US itself or in the European countries and placed m the Euro-dollar market. So long as the reserves of the oil-exporting countries are denominated in dollars, they are nothing but lOUs drawn on the US, though not all of them may be held in the US. In effect they are unilateral loans made available to the US economy. The Americans also know that the oil-exporting countries do not have much of a choice about keeping their reserves except in US dollars.

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