Third and Fourth World Energy Problems, Part 2; Energy and International Relations and Finance

baucus the opposite that even though this dance to foreign investors from friendly countries are explanation and explication of its hydrocarbon resources the mint is ready to participate even in the bleakest conditions to the oil companies aren't allowed to gain the interest off to commercial discoveries and expanded live in cairo that have discoveries didion vote in proportion to being just require it gum and often discovers it came in southern illinois credit towards income tax it has been decided that it should be targeted to fix it and a half percent of that had been you know not on a sliding scale would increase production taxes and income cannot exceed fifty five percent of the profits before to get an agreement to cut income taxes job i did between fifty to fifty five percent inclusive of right right for the incentives i want these warning appropriate lessons it mining these other local bookstore picture for two senate seats from such exporter the local uk and abroad

import duty and machinery and equipment into the country an explanation is levied at a concessionary tickets off offshore drilling will import duty and see a sex addict my government is also prepared to enter into production sharing agreements so that i define it is the state that pakistan is keen to like the oil and gas companies and investment operations they could want to begin the stands the law for them an exploration an expectation of energy i have to say about the situation in basra but i want to skip would be patented as anyone who was specifically interested i'm sure can get a copy i go i've been able to give you some idea of the problems the increased by the poorest

amongst the developing countries the implications of the international community a sense of it in the short term at the great concession look systems to happen why did whenever these countries like your immediate balance of them and difficult so they're forced to get access to that other countries have to be provided to enable these countries sufficient foreign exchange at raising more establishment of the new economic order not be doing in terms of going from dish it should be abandoned as good at fugitive mom and wants these forces meaning from operation in this progressive the interdependent were upset that it features and boil it isn't all not impossible tip economically and socially integrated in the international

we don't see as the damaging d and that fabric of modern civilization initiatives let us therefore such ford had in hand and a spirit of cooperation and accommodation so that the sources of this unexpected that the maximum five the improvement of the standard of living and quality of life everywhere like hank you wanted a map genie ft economic minister of the embassy of pakistan speaking on problems of development and energy resources and the third and fourth worlds his remarks were recorded in april nineteen seventy six at the university of texas austin and an international conference on energy our second speaker on this program also recorded at that conference was former us secretary of commerce peter peterson he will speak about the relationship of energy to international relations and finance and he is introduced by dr ellsworth rostow dean of general comparative

studies at ut austin speaker comes to us with a stunning record most of which i suspect you know one in nebraska educated they're at mit northwestern university of chicago he went early into the private sector and did impressively there and he became a the head of a gem watermelon how the ages eighty four and went on from that position into louis public sector by nineteen seventy one joining the nixon administration in his field as an expert on international economic affairs later as secretary of commerce and still later has risen representative in a massacre for this country he was instrumental in creating very valuable guidelines in this crucial field of not only of international economic policy but a national pastor it is a great

honor to have him here today he also darrell issa who's an energy conference in that he is a man who recycled his first name and uses it as his last name is my great pleasure to introduce to the former secretary of commerce the honourable peter peterson i thought i'd do today is perhaps no time in getting some question her own providing them to many answers i do that for a couple reasons the first is obviously minimize my exposure that way and force me to provide answers to questions that i don't know the answer to i guess more than that the smartest or approach will avoid my telling you more than i know more than you want to hear from me so what i thought i'd do is present some questions to

maybe go a little bit beyond that to suggest some principles that might give our national energy policy is a level coherence and unicef's international energy policies not international finance policies poses you know for now to talk about international economic and political policies and i think one of the problems we've had in the last few years is that we all animal interaction fall caesar not very coherent and i suppose we're spending time asking why aren't they call here it is well start with i guess we have what we used to call on our home state of nebraska some very handy they weren't attitudes toward the world that we're living in for example at one level where an exaggerated sense of fear the same family have an exaggerated sense of are potent san are important sonar sounds of the gemini from earlier periods

i may give you an example or two or three of those so called anti violence that exists in american policy on international energy now we see this ambivalence for example were triggered a foreign investment and american politics as you know as well as on the payoff is usually to the politician complained of instinctive chauvinism and also end the show a mistake it's very desirable have an enemy then an image of verner so much so the one generator cause with regard international finance or energy or economic be sure they do in the top on the foreigners and join us in for many years use colorful language and if you can use a german phrase or two so much better so for

example as in the case of viet nam aisle listen carefully to the accents and if you hear some politicians' referring to that a rat money you have an idea of what was to follow so we have been sending out signals for some time was such a pejorative races as well and the flood the american market they're gone one day job market are going to take us over and similar questions are being asked there might say that her years of an expert in euphemisms i had to spend half of this we can try to find out what the acronym ave because in politics week we use euphemisms like clothes invasions competition racism that's where i discovered that the word was of this man alcala my own business is i look at the numbers on american opec and i would think we should be concerned about

what we should be concerned about a bra for example if you look at the controversial in just the last two years forty two that in this last year probably sixty billion and seventy or over a hundred billion and won lots of long term investments in states there's something here almost entirely in treasury bonds and notes almost none of it in a long term investments in this country less than two billion in equities in this country so although foreign portfolio invested united states about so about sixty billion something less than four percent are as from the oil producing countries sell <unk> once we seem to have a policy here of proposing non solutions to non

problems and among the non problems the united states faces are sometimes regarded international energy finance it's a concept that the so called a rapture about the takeover of the us companies that do things could be less attractive to my experience the net hospital what is their real life so that we should be focusing on and why i suggested are problems less technical a more conceptual i suspect whenever rely problems in this country and the rest of the world has a problem of what the capital shortage about which there's a good deal of debate these days but as i look at the extraordinary energy investments in the next ten years which seemed to go up about eight hundred billion dollars over six months or so as i look at the pollution environmental requirements where i saw the other day that just four airlines industry alone to retrofit their jet engines to me no it's an injury that's been a big deal and as i look at

the our labor force of sarajevo or will be with us in the next few years i'm <unk> economic advisors says if we're gonna legitimately naomi what would seem to be sensible the work i have to somehow increase our rate of savings in this country are an investment about ten percent to something and access to proper sense which is really a striking change now there are those who say we don't have a terrible shortage of you read carefully though sanctions and one other studies of all ages you will see that there's an iowa goes as follows our country's going to grow their revenues are going to go up and we're going to have a sober thoughts in our government budgets we examined the premises of underwater that it is alleged that leno new social programs are government programs only the existing ones will be permitted to grow our wto also have to believe that i'm leaning harder good looking in march

all so i suspect that our objective should not be two thousand dollars in music that are threatening but how to we looked at this pool of two hundred billion dollars in excess or service probably or something in that range by it may not only attracted and how do we reassure foreign investors are not only do that throughout the world are so these people ceo of social security in their investments and i think there's a whole field here that needs to be looked at another example is the american part we're out of at least one side of our minds most of those who have been out of public life balance that we're living in a new interdependent world in which were all vulnerable together at the same time are saying that we speak with great force about the virtues of us project independent so

the united states can become an independent on the subtitle i think any person that has even a reasonably comprehensive you open or living in would have to say that energy is a global problem and for the sake of our consuming friends and allies throughout the world or something less than the shirt about are rather nationalistic rhetoric on oil and for the sake of eventually sending more market pressure on oil prices we have a lot to gain mutually by greatly diversifying the potential for producing oil throughout the world for the united states for example or in recent studies with about five percent or thereabouts so the geologic week a remote area of the world for oil is a side of about two thirds of the oil's said the result that week tennis in the world was developed the highest pressure issues on what we've left less developed some lower cost sources of oil

for example in india are in total there were only ten exploratory wells last year compared to about seven thousand this country and hurts the average production rose was less here than where sam nunn another he says smorgasbord i guess another dilemma that we have to face is what's being proposed of the international resource bank or as i understand it some kind of a global bank will lend money to countries develop resources including energy senate's that country defaults or operator nationalizes or something there's no bank would assume the losses this is nominally raise questions about what kind of an incentive is this to the private sector each produce those who really know more about it and i we're really saying i'm going to be any sanctions unless you were living in other countries are the dew explorer so i don't think you can have any kind of a

discussion of international energy finance by having some vision in your head as to what kind of a new economic order where you're talking about and low what i'm trying to say is that it's hard for me to think about the old problem without having some notion about what are going to be elements of that new international economic order my guest for long run have to talk about a somewhat different system of international commerce and we've had a criminal or we talk about both benefits and sanctions or we talk about both benefits and birds are we talking a critter i reach of terror suspects applied to all of those the things that various of our countries have to offer other countries are such things as market capital at has access to resources access to labor the question of what happened before

yes whether they also don't have to be a roughly equal doses of sanctions for those of us in this new global economy that we speak so glibly about decide not to live by the rules and i might say that should apply the united states as well as other countries grow it my friend tax cut but i wouldn't that it is simply inappropriate for a country to express its ambulances publicly as we do sometimes the same time we talk about a and expanding old world of commerce how about protectionism all over the world a lack of unilateral action we think it's quite appropriate to put export controls on soybeans at the same time that a major a customer friend of ours several thousand miles away has learned to depend upon this is a major source of food herders service your read through tens of iran report and other people as well as

to us another problem says the rhetoric that says growing dependence on insecure sources of oil is unacceptable we somehow seemed to go on army accepting of the becoming today in ontario there's a lot of talk these days about the so called energy independence authority and if one wants to work roused suspicions of all types to various points on the political expect spector and their reactions to this proposal around three hundred billion dollars will be put into movie part of political expressed spectrum approach this is

probably what you know you'll hear descriptions like leaves sally oil companies engaged in one giant recall nineteen seventy three by forcing high prices on the american consumer and they're creating a hero at all shortage are clearly a major conspiracy now they're expecting a second giant recall the millennium of fireworks is iran's are the only person that we're losing these projects would be to consumers if you talk to people from right from more conservative there would say you got this is the energy equivalent of a wholesale order to have energy socialism in america and what a terrible waste of a hundred billion dollars in the capital market so again li li yuan product of which were doing were a lot of us like very much to slow the american ideologue an end

up probably doing nothing and which we seem to like every kind of energy except the ones if we get no oh this is going to require this problem is going to require some unusual and that might be because we're confronted with the fact that on the one hand we all agree we need new energy sources but if you look at the investments in these new energy sources from the standpoint of rationalization you know a contradiction in terms you are you would you would find something of the following in the first place are investments and so synthetic your projects like faction gasification shale i'm so poor typically we're not five hundred million to a billion dollars just for fifty thousand barrels a day this is more than a net worth of some of these companies like i guess it was a good check on

their relative contributions i recall two who run the world to you madam hen it's only contribution to me it's my entire existence were talking about and i would guess that many corporations are simply interests are politically unacceptable you look at the cost from these new energy sources and what happened was a businessman david manning what the prospects might be last summer the synthetic oils are running somewhere between called twenty five dollars a barrel at the same time an oil produced in the mideast and bass frets ten to fifteen cents a barrel so hot summer so called man of principle living in this highly ambiguous and new world who have said and hands pressed that we believe in the market system to allocate resources and certainly no rational jury time i do are not presented with some reason for ambivalence because to say that we'll rely on the market system in america

to commercialize these new energy sources has to say that her for doing nothing because as precisely what will happen but i suspect those two assad in conventional terms of what is clearly a noncommercial situation i don't have to think of new models by which some of the projects on the one hand made the unusual nature of the problem and on the other hand are acceptable to our political system sal i would be among those who think that rather than having the government guarantee a lot of these projects with massive guarantee loans that would be an alternative i would become very slowly i would rather have a government to say we'll buy so much oil from such and such a process of such and such a price or grover such and such a period of time and let the bidding process move in and what's at risk to the extent that it will be accepted takeover set a final kind of ambulances whole international

finance energy finance for a kind of problems only of the less developed countries set tank nineteen seventy five for a moment to see how much of the impact of this oil problems only third fourth and fifth world the aggregate deficit and seventy five seems to be a number like forty two billion dollars if you look at the current account deficit so the less development accounts for about thirty seven billion out of that forty two which means that the developed countries with much larger gross national products and having a semi only a very small amount of the steps so that the aggregate deficit to the less developed countries goes something like this nineteen billion and seventy three twenty eight billion in seventy four thirty seven in seventy five birch used to go down early and in the seventy six by

only a few billion dollars so while the opec countries are now putting a larger percentage of their so called and vegetables sir leo we see countries that might reach as much as any percent or twenty five years a lot more they could do if they thought it was in their interest and here's where this country has to resolve another piece of them noble we have been rather sticky end times best about walken what is obviously a new stars are in the world and only big leagues economic woes to gardner knows we've been very saucer jealous about voting rights and positions in various international institutions recently and reading about this international resource rather encouraged to read that there was talk now about equal votes in various parts of the world oil producers developed countries in the less developed countries and there was this notion that if we're asked these countries to

share in the solution they should also share in the rewards of our own and responsibility to go with a i guess i haven't my experience in washington suggests that if you're going to get a coherent set of policies you need at least two things first you had better have a coherent set of premises as just watching whatever world you want low and where your interest law we had a hard time coming up with as we conceive of a series of highly contradictory approaches to the same problem and i suspect it takes a large measure of political well with regard to the new leadership what i read maybe of his country outpost november to force us to face prospectively what you were originally talking about and twenty five years so i'm

a former us secretary of commerce has recorded april nineteen seventy six and an international partners an energy at the university of texas at austin her murderer on this special program about international issues and energy of jumanji mufti economic minister of the embassy of pakistan you've been listening to university for university farmers produced by katie fm and distributed by communication center university of texas at austin gratis la this is the longer radio network