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Oil PriceWar-
No Solution on the
Horizon
When the Arab oil embargo was
lifted las/ March, the crisis, instead of
being over, shifted into the realm of
international finance.
A lmost overnight the inrernational
oil bi/1 hasjumpedfrom
525
billion lo
$100 billion. As a result, the IIVelve
member nations of the Organization
of Petroleum Exporting Countries
are likely to register a trade surplus
of about $70 billion Jor 1974 as op–
posed to only
$5
billion last year.
Their major customers, on !he other
hand, !he industrialized nations oflhe
non-Communist world, could slump
into a massive deficit of $40 billion
this year
-
after having enjoyed a
combined frade surplus of
$12
billion
for 1973.
No nations are more seriously af
jec1ed by the oil price crisis than the
members of Europe's Common Mar–
ket. Plain Truth corresponden/ Frank
Schnee files this report:
Düsseldorf:
Largely because of the sky–
rocketing price in the cost of impor–
ted oil from the Middle East and
North Africa, five of the nine Euro–
pean Economic Community coun–
tries - ltaly, Britain, France,
lreland and Denmark - together
will run a devastating trade deficit
of about $20 billion. The Benelux
nations are just about at equilib–
rium Only Germany is expected lo
show a trade surplus.
Experts here in Europe are now
saying tbat the economies of many
industrialized nations may actually
go bankrupt trying to pay for the oil
to keep their industries moving. The
sudden shift of monetary reserves to
the oil exporting nations is threat-
ening financia! chaos. ft is feared
that the oil producing states. by sud–
denly switching their astronomical
reserves from one currency to an–
other, could touch off an inter–
national monetary crisis.
David RockefeiJer, chairman of
Chase Manhattan Bank, recently
called the problem one of "global
magnitude and urgency." He has
been on a tour of the world's finan–
cia! centers to find government help
with the problem.
When asked if he foresaw an
im–
mediate solution to the mounting
crisis, Mr. Rockefeller said: "As for
me personally having a solution, 1
am afraid l have to answer you, No,
I don't!"
Huge balance of payments defi–
cits in the oil-buying nations are
fueling inflation, which was already
threatening to go out of control be–
fare the new quadrupled oil prices.
There
is
sorne fear now that sorne
nations will start protectionist mea-
French Reevaluate
Defense Posture
There are changes in the wind for
the French defense policy. The impli–
cations for Western Europe and the
Atlantic alliance cou/d be significan/.
Here is an analysis by Plain Truth
corresponden! Henry Sturcke.
Brussels:
A series of secret, top-level meet–
ings in París in mid-summer have
laid the groundwork for a new
French initiative concerning Euro–
pean defense. If implemented, the
move could lead to renewed French
cooperation with other European
nations in defense matters - a ma–
jor change in the longstanding
French policy of independence
in
foreign atfairs.
In 1965, General Charles de
rlll
sures (as ltaly already has) to con–
serve foreign exchange for oil
purchases. This could have a drastic
stifling effect on world trade.
The world's financia! markets are
already admitting to a precarious
situation, as is witnessed by recent
developments. The banking system
was dealt a severe blow when the
Franklin National Bank of New
York almost collapsed, and the Her–
statt Bank of Cologne actually did.
Since then, severa! smaller banks in
Germany and one in Austria have
closed their doors. Dozens of other
banks are known to be having great
difficulties in staying solvent.
One Swiss banker stunned Euro–
peans recenlly when he suggested
that a country like Italy or Britain
may have no alternative out of the
liquidity problem except to call a
moratorium on payments of their
debts for a year. lf this should hap–
pen, a panic-motivated run on
banks could result.
Gaulle pulled F rench forces out of
NATO and demanded that the
headquarters of both NATO and
SHAPE (Supreme Headquarters of
the Allied Powers in Europe), lo–
cated in París since the early days of
the alliance, leave France.
The reasons for this change in
sentiment are as follows:
First, the growing realization that
France's nuclear
force de frappe
is
becoming too expensive to carry on
alone. Logically, a European-wide
nuclear defense league would con–
siderably ease the French financia!
burden.
The second reason, also eco–
nomic, is that the French economy
would receive a badly needed shot
in the arm, and France's oil-induced
balance of payments problem would
be considerably helped if France
could increase her arms sales in Eu–
rope. NATO has been gradually
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