Chapter 1. Major Developments in the World
Section 1. Characteristics of the Period
On the international political scene, relations between the United States and the People's Republic of China and between the United States and the Soviet Union, which began to develop dramatically in 1971, continued to be strengthened further, thereby exercising a far-reaching influence on the world. More or less influenced by these developments, many countries reacted in various ways in efforts to adjust their own positions to the changing international environment. On the international economic scene, meanwhile, the unstable situation since 1971 persisted, Many countries took measures to cope with it and continued their search for a new order.
Thus, the world in the past year on the whole underwent rather erratic changes. A review of outstanding developments in the situation is as follows:
1. Trends of major countries
(1) U.S.-Soviet relations of cooperation
President Richard M. Nixon visited the Soviet Union in May 1972 as the first U.S. President in office to do so and exchanged opinions on important problems of the world, including Vietnam and European security, and reached agreement on various matters in their bilateral relations. These included agreements on important subjects-the Basic Principles of Relations and strategic arms limitation in two fields. These were truly epoch-making events.
(2) Progress in Sino-American relations
On the occasion of U.S. Presidential Assistant Henry A. Kissinger's visit to the People's Republic of China in February 1973, the United States and China agreed on the establishment of respective liaison offices in each other's capital, thereby bringing to an end one phase of the process of adjusting their bilateral relations. Hereafter, the two countries are expected to enter the stage of advancing their working relations.
(3) Relations between China and the Soviet Union
In contrast to the progress in U.S.-China and U.S.-Soviet relations, the underlying confrontation between the People's Republic of China and the Soviet Union showed no signs of abating throughout 1972. Instead, their exchange of criticisms intensified to the extent that they defined each other as a principal enemy.
(4) China's entry into the international community
China carried out active diplomatic activities in international forums, such as the United Nations and the Vietnam peace talks, and also in its bilateral relations with the United States, Japan, Western Europe and the developing countries, and attained considerable results.
(5) Developments in Western Europe
In Europe, the members of the European Communities expanded from six to nine countries, and they are developing into a community comparable to the United States with respect to economic power. Politically also, they are strengthening their cooperative relations.
2. Other important developments
Efforts to ease tensions were observed in various parts of the world along with the developments in U.S.-Soviet relations.
In Europe, the German-Soviet Treaty, the German-Polish Treaty and the Quadripartite Agreement on Berlin went into force, and the Basic Treaty between the two German states was signed. Preparatory meetings for a Conference on Security and Cooperation in Europe (CSCE) and preliminary talks for negotiations on mutual and balanced force reductions (MBFR) were also held.
In Asia, the dialogue in the Korean Peninsula between South and North Korea was continued along with the improvement of relations between China and the United States and the normalization of relations between Japan and China. In January 1973, the Vietnam Peace Agreement was concluded, followed by the Laos Peace Agreement.
In the Middle East, however, tensions still persisted al-though the state of cease-fire between Egypt and Israel was maintained.
3. Important developments on the international economic scene
(1) Major currencies shifted to the floating rate system
The international monetary system remained relatively stable under the Smithsonian System which started functioning at the end of 1971. However, as a result of massive speculation in foreign exchange after the turn of 1973, the dollar was devalued again and the yen and major European currencies shifted to the floating rate system.
(2) New International Round to start
In the field of trade, it was decided to start a New International Round by holding a GATT ministerial conference in Tokyo in September 1973 in accordance with the political decision made by Japan, the United States and the EC. It is believed that the New International Round will be of very great significance to the maintenance of the free trade system.
(3) Energy problem gained greater importance
In recent years, the members of OPEC (Organization of Petroleum Exporting Countries) took a series of measures concerning petroleum, including the raising of petroleum prices, participation in management, and nationalization, based upon what is called "resources nationalism." On the other hand, the world's demand for energy, mainly by Japan, the United States and the EC countries, increased greatly. It is expected that the United States will enter the world petroleum market as a major importer in view of its falling rate of self-sufficiency in petroleum, thereby causing the supply of petroleum and other sources of energy to become tight throughout the world. Against this background, the energy problem attracted greater attention internationally during 1972.
How to solve this problem is expected to take on global dimensions in the latter half of the 1970s, and it is becoming a matter of greater concern to Japan which is poor in energy resources.
(4) Problems of the developing countries
The situation remained unimproved for the developing countries with respect to terms of trade, accumulation of debts, and stagnation in aid from the developed countries. Moreover, the food shortage became increasingly serious and the problems facing the developing countries showed no tendency to decrease. Another problem was the increasing gap among the developing countries themselves.