While there were a number of developments in 1977 which were noteworthy for their impact on the international situation, such as the start of the Carter Administration in the United States and the reinstatement of Vice Premier Teng Hsiao-ping and the establishment of Hua Kuo-feng's leadership in China, the year 1977 may be termed a year in which no solutions were found for the various political and economic issues pending since 1976 and before.

On the international political scene, such pending issues as the second Strategic Arms Limitation Talks (SALT-II), the Middle East peace problem, the problem of southern Africa, and the normalization of relations between China and the United States were carried over for settlement in 1978 and beyond. Moreover, such developments as the friction between the Soviet Union and the United States over the human rights problem and local conflicts in the Horn of Africa and elsewhere added to the list of destabilizing factors. On the international economic scene, the year 1977 saw the spread of protectionism, increasing trade friction, and international currency unrest while the major developed countries suffered from business stagnation, unemployment, and inflation. Nor were any basic actions taken to resolve the energy problem. Thus the world economic situation did not improve to the extent expected. Although continued efforts were made to promote the dialogue on the North-South problem, many difficult problems remained unsettled.

The following section surveys the major developments in 1977 in amplification of the situation mentioned above.



I. Trends in the United States China the Soviet Union, and Other Regions


1. Trends in the United States, China, and the Soviet Union (Including Bilateral Relations)


(1) American-Soviet Relations


In American-Soviet relations, which had been keenly watched because of the difficulties encountered in the second Strategic Arms Limitation Talks (SALT-II), friction arose in the opening months of 1977 due to the importance attached to human rights in the Carter Administration's foreign policy. Although their relations calmed in the middle of the year, a fresh exchange of words took place again to ward the end of the year and into early 1978 in connection with the new developments in the Middle East, the Horn of Africa and else where and against the background of the continued Soviet efforts to build up its armaments as symbolized by its expanded international military support capability as seen in these local conflicts.

Although no agreement on SALT-II was reached before the SALT-I agreement expired on October 3, the two countries continued the talks beyond that date. (The two countries also expressed their intention to continue to observe the SALT-I agreement.) In other fields, they held consultations, initiated on the occasion of Secretary of State Vance's visit to the Soviet Union in March, on such problems as a comprehensive test ban (CTB) and arms control in the Indian Ocean. In October, they issued a joint statement on the Middle East problem pledging their efforts for the resumption of the Geneva Peace Conference by the end of 1977. (However, the Conference did not take place after all.) Trade between the two countries in 1977 decreased from the 1976 level, and the Soviet Union continued to register an excess of imports over exports.


(2) Sino-American Relations


Neither the United States nor China made any changes in its policies for solving the Taiwan problem, while both maintained their basic attitude of improving relations on the basis of the Shanghai Communique. No concrete progress was made in their relations despite Secretary of State Vance's visit to China in August.


(3) Sino-Soviet Relations


There were no major changes in the relationship of confrontation between China and the Soviet Union.

The Soviet Union revived its criticism of China in the first half of 1977 after a period of restraint following the death of Mao Tsetung, while China consistently continued its strong criticism of the Soviet Union.

In their state-to-state relations, while the 20th Regular Meeting of the Joint Committee on Navigation in Border Rivers met for the first time in three years, no progress was made in the border negotiations and there was, on the whole, no major improvement in their relations.


(4) Domestic Developments


A. United States


For the United States, 1977 was a year of fresh start with the inauguration of a new President in the first presidential election since the Watergate affair, and rising expectations were placed on the new Administration. To meet these expectations, President Carter showed an attitude of positively tackling the wide range of problems at home and abroad. However, important problems were carried over for solution in 1978, partly because the Administration could not obtain sufficient cooperation from Congress, although it did make some progress.

On the domestic economic scene, the U.S. economy continued its comparatively sound growth by maintaining its underlying trend of expansion since the spring of 1975. On the other hand, the deficit in the U.S. trade balance increased sharply for such reasons as increased imports of crude oil and the leveling-off of U.S. exports due to the slow recovery of business in other developed countries, and the exchange value of the U.S. dollar has declined sharply against other major currencies since autumn. Coupled with plant shutdowns and lay-offs, this has given rise to the growth of protectionist pressures.


B. China


Under the leadership of Chairman Hua Kuo-feng, the Chinese Government formally reinstated Vice Premier Teng Hsiao-ping and tried to consolidate its position in 1977 while making strenuous efforts to eliminate the influence of the Gang of Four. From November, it tried to reconstitute Revolutionary Committees at the provincial level. In February 1978, it convened the National People's Congress which amended the Constitution, reappointed Premier Hua Kuo-feng, made personnel changes in Government agencies, and worked out specific measures in line with the domestic and foreign policies advocated by the Hua Kuo-feng Administration since its establishment. In the field of domestic administration, the Government adopted a realistic policy line attaching great importance to economic construction with a view to achieving "four modernizations" by the end of this century. On the basis of the theory of "three worlds," China stepped up its diplomatic activity around its policy of confrontation with the Soviet Union, expanded exchanges with the developed Western nations, and strengthened solidarity with the Third World.


C. Soviet Union


The noticeable developments in domestic politics in 1977, the 60th anniversary of the October Revolution were Podogorny's fall and General Secretary Brezhnev's concurrent assumption of the office of Chairman of the Presidium of the Supreme Soviet and the establishment of a new Constitution for the first time in 41 years, both of which events enhanced still further the authority of General Secretary Brezhnev.

In the economic field, the Soviet Union set targets for 1977 which were considerably more conservative than previous targets, yet failed to achieve many of them, such as those for national income, agricultural production, and labor productivity (manufacturing industry), although it did just barely achieve the target for industrial production for that year. Overall, the impression given was one of a lack of general progress in the improvement of its economic structure, a top priority problem.



2. Trends in Other Regions


(1) Korean Peninsula


A. North-South Relations


The situation on the Korean Peninsula remained at a stand still in 1977, with no sign of a resumption of the North-South dialogue.


B. External Relations


The Republic of Korea vigorously conducted its diplomatic activities against the background of its buoyant economy, and achieved such results as newly establishing diplomatic relations with the non-aligned and other countries. In U.S.-R.O.K. relations, the two countries discussed in a concrete manner the problem of with drawing U.S. ground troops from the Republic of Korea and reached a broad agreement on withdrawal plans. On the other hand, friction mounted between the two countries over the bribery of U.S. Congressmen.

North Korea, which suffered diplomatic setbacks in 1976 at the summit of non-aligned nations and elsewhere, tried to recover its lost influence in 1977 by making such efforts as approaching the non-aligned nations. On August 1, it established a 200-mile economic zone and a military boundary line.

As in 1976, the United Nations did not take up the Korean question for discussion in 1977.


C. Domestic Developments


The Republic of Korea endeavored to strengthen its self-reliant defence capability and to sustain its high economic growth. Remarkable achievements were made in the economic field: a 10% growth of its gross national product and the export target of $10,000 million were attained, and its current account registered a surplus for the first time.

As for North Korea, it seems that its economic situation failed to improve in 1977 in view of the fact that the problem of its foreign debts remained unsettled. In December 1977, North Korea convened the Supreme People's Assembly which reshuffled Government leaders and adopted the second seven-year economic plan starting in 1978.


(2) ASEAN Nations and Burma


A. External Relations of the ASEAN Nations


ASEAN observed the 10th anniversary of its formation and continued its efforts to strengthen the solidarity and resilience of its member countries and to solidify its relations with countries outside the region, including the holding of its second summit meeting and its first summit talks with Japan, Australia, and New Zealand. Recognizing that the stability and prosperity of the ASEAN region can be secured only on the basis of peace throughout Southeast Asia, the ASEAN member nations repeatedly expressed on such occasions as these summit meetings their hope of promoting peaceful and reciprocal relations with the countries of Indochina.


B. Domestic Developments


The ASEAN member nations continued their efforts to over come their political, economic, arid social vulnerability, although each of them still harbored some destabilizing domestic factors. In Thailand, the Tanin Government collapsed in a coup d'etat in October, and a new Government was established in November with Kriangsak, supreme commander of the armed forces, as Prime Minister. In Malaysia, the Hussein Government continued to strengthen its leadership position, although there were some political disputes at the state level. In Indonesia, moves to criticize the Suharto Government, principally among students, grew intense after the general election in May and toward the convening of the plenary session of the People's Congress scheduled for March 1978, but this opposition subsided because of the measures taken by the Government at the beginning of 1978. In the Philippines, which entered the sixth year under martial law, President Marcos won an overwhelming victory in a national referendum in December, thereby preparing the country for an eventual return to normalcy. In Singapore, Prime Minister Lee continued to demonstrate his strong leadership in domestic administration and in diplomacy, and the Singapore economy made smooth progress. In Burma, efforts were made to solidify the internal structure in light of the convening in March 1978 of the People's Assembly.


(3) Indochina


A. Domestic Developments


The three Indochinese nations continued their efforts in 1977 for national reconstruction and consolidation of their socialist systems.

In Vietnam, continued efforts were made in various fields to integrate North and South. In the economic field, the positive approach toward economic construction was evidenced in such measures as the announcement of a Cabinet Council decision on the introduction of foreign capital in April. However, agricultural production declined because of a drought and other reasons.

Laos continued to face difficulties in both the political and economic fields because of a shortage of goods, including a food shortage due to drought, inflation, and the activities of anti-government elements.

In Cambodia, the existence of a Communist party of which Prime Minister Pol Pot is Secretary was disclosed in September 1977. However, the country's internal conditions remain unclear in many points.


B. Intra-regional Relations


Vietnam and Laos strengthened their relations, while Cambodia severed diplomatic relations with Vietnam toward the end of 1977 on the ground of the border dispute. Because of the ambiguity of the border lines and the racial antagonism between the two countries, the border dispute is likely to drag on for a long time.


C. External Relations


There were no basic changes in their relations with the Soviet Union and China.

In their relations with the ASEAN member nations, Vietnam and Laos continued to be cautious of ASEAN as an organization. In bilateral relations, however, these two countries and Cambodia on the whole showed an attitude of seeking neighborly friendship with the ASEAN members on the basis of mutual respect for independence, sovereignty, equality, and reciprocity.

In relations between the United States and Vietnam, the former did not exercise its veto on the occasion of Vietnam's admission into the United Nations in September, although no progress was made in their negotiations for normalization of bilateral relations.


(4) Southwest Asia


A. Domestic Developments


In India and Sri Lanka, the ruling parties suffered crushing defeats in their respective general elections in March and July. In Pakistan, a sharp confrontation between the ruling and opposition parties over the results of the general elections in March caused the military to effect a change of government in July. In Nepal, there was a change of Prime Minister and a Cabinet reshuffle in September. Thus, the countries of Southwest Asia experienced major changes at home.


B. External Relations


Relations among the nations on the Indian Subcontinent improved further because the newly formed Desai Government of India showed an attitude of making efforts to further improve India's relations with its neighbors.

As for relations with the major powers, India, under the slogan of "genuine non-alignment," adopted a policy of making its relations with the Soviet Union more business-like and well-balanced on the one hand and tried to develop closer relations with the advanced nations of the West, such as the United States and Japan, on the other. It also sought improvement in its relations with China.


(5) Oceania


In Australia, the Fraser Government overwhelmed the opposition Labor Party in the general elections held toward the end of 1977, thereby demonstrating that it had the nation's confidence. However, the economy remained comparatively slow. In New Zealand, too, the economy was in very poor condition despite various measures taken by its Government, so much so that the problem of the economy became a political and social problem.

In their external relations, both Australia and New Zealand made active approaches to other countries in order to promote exports of their products, especially agricultural products. In April, the Prime Ministers of both countries took part in the summit talks with ASEAN.


(6) Western Europe


Although the various West European nations were faced with destabilizing- factors such as the stagnation in their business recoveries and the tendency toward near equilibrium in the parliamentary power balance between conservative and reformist forces, there were on the whole no major changes in their domestic situations.

In the economic field, Western Europe as a whole was unable to overcome the factors that had contributed to the recession since the oil crisis, and unemployment remained high, although some countries' balance of payments position improved a little. Against this background, protectionism gained force in some countries. However, inflation dissipated in most countries thanks to the adoption of tighter fiscal policies and wage restraints.


(7) Eastern Europe


While Government-critical campaigns under the banner of protecting human rights were seen in some East European countries at the beginning of the year through the spring, the Governments in Eastern Europe basically maintained their stability. In the economic field, the terms of foreign trade worsened, agricultural production was poor in Poland and some other countries, foreign debts increased, and there were on the whole no signs of improvement in their economies.

In the diplomatic field, attention centered upon the vigorous activities of Poland and Hungary in their relations with the West and the economic-oriented diplomatic efforts of the East European countries toward the Middle East. Albania criticized China's "three worlds" theory. President Tito of Yugoslavia engaged in vigorous diplomatic activities by visiting China, the Soviet Union, North Korea, and France.


(8) East-West Relations in Europe


Some friction was observed in East-West relations in Europe at the beginning of 1977 because the Carter Administration, in line with its pledge to stress human rights, took a critical stand on the suppression of anti-Government campaigns in the Soviet Union and East European countries. However, basically, no major changes were observed in East-West relations.

At a follow-up meeting of the Conference on Security and Cooperation in Europe (CSCE), which was held in Belgrade from October 4, there was smooth progress in the proceedings until the end of the year, partly because of a tacit understanding between East and West that neither side should make the CSCE a forum for confrontation and dispute, although there were occasional exchanges of sharp words centering on the human rights problem. However, the meeting encountered difficulties at the beginning of 1978 over the documentation of its conclusions.

As for negotiations for Mutual and Balanced Force Reductions (MBFR) in Central Europe, there was no noticeable progress at the end of the 13th round. In the relations between the EC and the COMECON, it was agreed at the summit talks held between the two organizations in September to open formal negotiations between them in the spring of 1978.

In the field of trade, some nations of the West counseled caution in granting credit to some countries of the East as the external debts of the East continued to mount.


(9) Middle East


Since the beginning of 1977, the Arab states involved in the dispute showed a strong tendency to seek peace with a view to achieving a comprehensive peace settlement by resuming the Geneva Peace Conference, and the newly formed Carter Administration in the United States conducted positive mediation activities. However, the views of the Arabs and Israelis on the question of PLO participation in the Geneva Peace Conference and the problem of Palestine remained wide apart. It was under such circumstances that President Sadat of Egypt visited Israel in November as the first head of an Arab state to do so, thereby opening direct negotiations between Egypt and Israel. However, the different positions of the two countries on such issues as the withdrawal from occupied territories and the problem of Palestine could not be easily reconciled, and the negotiations, assisted by U.S. mediation activities, were to be continued into 1978.


(10) Africa


As for the situation in Africa, there were active moves over the problem of southern Africa, and there was conflict in the Horn of Africa.

As the Vorster Government in the Republic of South Africa oppressed domestic groups opposed to apartheid, this provoked stronger international public opinion against apartheid, as evidenced by the adoption in November of a U.N. Security Council Resolution on a mandatory arms embargo against South Africa.

In Southern Rhodesia, the parties concerned failed to reach agreement on a peaceful settlement despite the efforts made by Britain and the United States to that end. Meanwhile, the white regime of Prime Minister Smith tried to work out an internal settlement with moderate black forces.

In Namibia, the five Western members of the U.N. Security Council (Britain, the United States, France, West Germany, and Canada) conducted negotiations with the Southwest Africa People's Organization of Namibia (SWAPO), South Africa, and others for a peaceful settlement of the Namibia problem.

A dispute between Ethiopia and Somalia in the Horn of Africa began to intensify from around June, and developed into a conflict between the two countries when Somalia gave full-scale assistance to the liberation forces in Ethiopia.

In the economic field, many countries were still unable to overcome their economic difficulties because their economies are generally based on agriculture, which is susceptible to market fluctuations and weather conditions, although there were signs of improvement in some countries such as the coffee-producing nations.


(11) Latin America


As in 1976, the pattern of military rule remained conspicuous in most countries in Latin America. However, it was notable that several countries, including Bolivia and Peru, announced plans to transfer power to civilian administrations and that there was a growing trend toward the adoption of more realistic policies in economic management.

The United States and Panama concluded negotiations for and signed a new Panama Canal treaty in September.



II. Major Multilateral Problems


1. The Economies of the Industrialized Democracies


In 1977, the economies of the industrialized democracies, as a whole, failed to recover from the recession as fast as had been expected. Although the U.S. economy maintained its basic tone of comparatively smooth expansion, economic recovery was slow in the other major countries. The economic growth rate of the OECD member nations as a whole in 1977 was about 3.5%, and there were fluctuations in the international monetary situation including a sharp decline in the exchange value of the U.S. dollar.

Business stagnation was particularly conspicuous in West European countries where production levels did not rise, the employment situation tended to worsen with longer periods of unemployment and increased unemployment centering on younger people, and pressures for protectionism increased in some countries.

Under the circumstances, the industrialized democracies made vigorous efforts to stabilize the world economy and to promote free trade. At the summit meeting of major industrialized countries in London in May, they expressed their determination to act together in order to cope with the many difficulties of the world economy.


2. North-South Problem


On the North-South problem, the keynote of the dialogue was basically maintained. The Conference on International Economic Cooperation (CIEC) held in Paris in May produced such results as basic agreement on the creation of a common fund for primary products, a $1,000 million special-action program to be undertaken by the developed nations, and agreement on the expansion of official development assistance. On the other hand, there were some problems which it was impossible to solve to the satisfaction of both developing and developed nations. For example, the developing nations failed to achieve satisfactory resolution to the problem of their accumulated debts as they called for a new international economic order (NIEO), and the developed nations remained unsatisfied with the continuing dialogue on energy.

However, the desires of both North and South for the continuation of the dialogue remained unchanged, and negotiations for the creation of the common fund and a number of consultations on individual primary products were held throughout the year. On the occasion of the 32nd U.N. General Assembly, an ad hoc committee representing all members was established to review the entire North-South problem in preparation for the Special Session of the U.N. General Assembly in 1980.


3. Problems of the Sea


Many countries established 200-mile offshore zones in rapid succession while the 3rd U.N. Conference on the Law of the Sea made little progress, thereby opening an age of 200-mile fishery zones. To cope with such international moves toward the establishment of a new maritime order, Japan also declared its 12-mile territorial waters and 200-mile offshore fishery zone under the Territorial Waters Law and the Law Concerning Tentative Measures on the Fishery Zones, both of which went into force on July 1. With the advent of these 200-mile zones, Japan conducted bilateral and multilateral fishery negotiations with the nations concerned and concluded several fishery agreements, including those with the United States and the Soviet Union.


4. Peaceful Uses of Atomic Energy


The newly established Carter Administration in the United States advocated nuclear non-proliferation as one of its top priority policies and proposed international consultations on nuclear fuel cycles. At the invitation of the United States, 40 countries including Japan attended the inaugural meeting of the International Nuclear Fuel Cycle Evaluation (INFCE) in Washington in October. The meeting decided that the INFCE, which is aimed at establishing a nuclear fuel cycle that will reconcile the needs for nuclear non-proliferation and for the peaceful use of atomic energy, will make relevant studies over the next two years.


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