IN 1983



1. Overall Characteristics


(1) The international situation in recent years has been one of increasing volatility and instability. While this reflects the prevailing tensions and confrontations, it may also be viewed as reflecting the process toward a new equilibrium. The major characteristics are as follows.

(a) The framework of East-West relations, and especially that East-West military balance of power which forms the basis for the international situation, has been altered with the change in the balance of power prevailing between the United States and the Soviet Union in the 1970s. Under these new circumstances, it is expected, on the one hand, that the unity demonstrated by the free and democratic nations at both the Williamsburg and London Summit Meetings will contribute to building more stable East-West relations and; on the other hand, that the Soviet Union is unlikely to be able in the immediate future to formulate a definite foreign policy toward the West, partly because its present leaders are not yet in a position to exercise strong leadership after two successive leadership changes over a very short period of time and partly because the Soviet leadership will need to await the results of the United States Presidential election and to assess the conservative tide evident in the Federal Republic of Germany, the United Kingdom, and elsewhere.

(b) While regional military confrontations such as those in Afghanistan, in Cambodia, and elsewhere as well as the Iran-Iraq conflict remain unresolved, regional tensions have grown in the Middle East, Central America, and other areas. These are also destabilizing factors in the international situation.

(c) American-Soviet relations, Sino-Soviet relations, and Sino-American relations, all of which have significant impact on the overall international situation, have continued to be fluid and subject to considerable short-term fluctuation. In Sino-American relations, the rough edges on the relationship have been smoothed and the relationship is now headed toward increasing stability as a result of the exchange of visits between the two nations' leaders.

(d) Amid growing tensions between East and West, there is increasing appreciation of the importance of the Asia-Pacific region and the strategic importance of the Far East.

(e) In the world economy, while the industrialized economies have begun to show non-inflationary recovery, albeit with some unevenness among them, the developing economies continue to be faced with accumulated debts and other difficult problems, even though signs of recovery are evident in some Asian countries.


(2) Although there was a tendency to overlook the importance of East-West relations in the climate of detente that prevailed in the 1970s, the subsequent changes in the international situation have generated renewed awareness of the importance of East-West relations as the determining factor in the international situation and of the need for the West to deal with East-West relations realistically.

The detente which characterized East-West relations in the 1970s was founded upon a theoretical basis of a balance of terror with both the United States and the Soviet Union possessing sufficient strategic nuclear forces to mutually and assuredly destroy each other. There was a Western expectation that, so long as Mutual Assured Destruction (MAD) held true, the East would refrain from attempting to alter the balance of power and exacerbating international tensions. At the same time, it cannot be denied that the strategic thinking underlying this policy choice contained an element of wishful thinking arising from political, economic, and social factors in the West. Contrary to expectations, the Soviet Union embarked upon major expansion in its conventional and nuclear forces throughout this period, and there is no clear end yet in sight to this expansion. Backed by this expansion, the Soviet Union advanced its military presence throughout the Third World, invading Afghanistan in 1979.

These moves by the Soviet Union provoked heightened concern in the West, and responding to the Soviet military buildup became an urgent imperative, especially for the United States. Already in the final years of the Carter administration, there were programs for radical strengthening of the United States' military capability, and the Reagan administration moved quickly to achieve its basic goal of restoring American might and credibility. With the conservative title in the Federal Republic of Germany and the United Kingdom, the West as a whole has taken a more realistic policy stance and forged common perceptions toward the Soviet Union, as seen in the political statement of the May 1983 Williamsburg Summit Meeting which declared that while the participating nations shall engage in serious arms control negotiations they shall also maintain sufficient military strength to counter any threat, to ensure the peace, and to defend the freedom on which the industrialized democracies are based. This stance was also manifested in the deployment of intermediate-range nuclear missiles by the North Atlantic Treaty Organization (NATO) in Europe: when the INF negotiations in Geneva were broken off in November, the West went ahead with the deployment of Pershing II and cruise missiles in Europe in line with NATO's 1979 double-track decision. This deployment of American missiles did spark a renewed anti-nuclear movement in some European countries, but that has not had an appreciable impact on Western policy toward the Soviet Union.

The Soviet Union is thus now faced with the need to make a choice between the two policy options of (i) partially abandoning the relative military superiority attained in the 1970s and moving to reconciliation with the West or (ii) continuing still-greater military build-ups. Dialogue between the United States and the Soviet Union in the strategic arms control talks had traditionally been one of the most important pillars of Soviet-American relations, and, until its present suspension, this dialogue had never been interrupted in the past on account of any events. Should the Soviet Union continue to reject substantive dialogue for any prolonged period, its relations with the United States would reach unprecedented levels of tension. It is therefore considered more likely that the Soviet Union will eventually move to restore the dialogue. However, the leadership changeover to Andropov and then to Chernenko over a very short period has made it difficult for the Soviet Union to exercise strong leadership, and it would be domestically difficult for the Soviet Union to appear to make any concessions to the West. At the same time, the Soviet Union may well want to wait and see how long the Free World's present stance persists and what kind of an impact the resurgent anti-nuclear peace movement has in Europe. As a result, it is expected that it will still be some time before the Soviet Union develops policies acceptable to the Free World, and that the Soviet Union will continue criticizing the United States in the interim.


(3) As growing tension in East-West relations casts its shadow over the international situation, the importance of the Asia-Pacific region has become a focus of global attention. Despite the recent worldwide economic downturn, the Far Eastern and ASEAN countries have achieved satisfactory economic growth and become increasingly important. The fact that the Soviet Union has increased its military presence in the Far East, particularly its Pacific fleet, in response to changes in Sino-Soviet-American relations in the 1970s has highlighted the increasing importance of the Indian Ocean and the South China Sea. Above all, the recent build-up of strategically important submarine-launched ballistic missiles (SLBMs) in the Far East impinging directly upon United States security itself has made the United States even more acutely aware of this region's strategic importance.


(4) With the regional conflicts in Southeast Asia, the Middle East, and elsewhere unabated and unresolved, there was a vicious spate of incidents in late 1983 including the Soviet downing of the KAL jetliner in September, the terrorist bombing aimed at President Chun Doo Hwan of the Republic of Korea and his party in Rangoon in October, the terrorist attack on the Multinational Forces (MNF) in Beruit in October, and the terrorist attack against the Israeli military headquarters at Tyle in October.

All of these incidents are surface manifestations of the tensions and instabilities underlying the international situation; all, depending upon how they are dealt with, have the potential for developing into major incidents affecting overall East-West relations; and all bear witness to the untenability of optimism about the future. In fact, developments in Central America, including Grenada and Nicaragua, have already transcended their regional boundaries to reflect the tension in East-West relations.


(5) One reason for the volatile international situation is that relations among the United States, the Soviet Union, and China are in a state of flux. For example, strategic confrontation exists between the United States and the Soviet Union; border security issues remain between China and the Soviet Union; and Taiwan is still an important issue in Sino-American relations, even though the exchange of visits between the to pleaders of the two countries has produced conspicuous improvement in the relationship. These problems, which form potentially decisive elements for their respective relations, are too difficult to be solved immediately. With each of the three powers acting on its own initiative and in accordance with its own perceptions of the international and domestic situations, the trilateral relationship is inevitably in a state of constant flux.


(6) After prolonged recession, the industrialized economies, led by the United States and assisted by lower inflation and reduced petroleum prices, have begun to recover. However, the pace of recovery differs among these economies, and many problems still exist such as high interest rates, budget deficits, and unemployment (especially in Europe) in achieving sustained non-inflationary growth. Underlying these problems are such issues as ever increasing fiscal expenditures and rigidity in the labor market as well as in the industrial structure, and it is imperative that these issues be dealt with in the medium- and long-term perspective.

The economies of many of the developing countries remain sluggish because of insufficient recovery in commodity markets, accumulated debts, and other problems, and they have been forced to defer their development programs and to implement new austerity measures entailing heightened social tension. Under these circumstances, the June sixth session of UNCTAD reaffirmed the growing interdependence between North and South yet was unable to decide upon new directions for international cooperation.

Although world trade showed a slight increase in volume in 1983, considerable regional disparities were observed, and protectionist tendencies persisted reflecting the grim unemployment situation in many countries. Against this background, it was agreed in May at the Williamsburg Summit to halt and roll back protectionism by dismantling trade barriers as the economic recovery progresses; yet it will not be easy to implement this determination, and it is necessary to keep a watchful eye on trends in all countries.



2. Major Trends in the International Situation


(1) Sino-American and Sino-Soviet Relations

(a) Despite the visit by Secretary of State Shultz to China to create a climate conducive to improved relations, Sino-American relations remained rocky in the first half of 1983 over Taiwan and other bilateral issues.

Yet some favorable trends became evident in Sino-American relations from mid-year onward. One possible explanation for this was Secretary of Commerce Baldrige's conveying, when he was in China in May, President Reagan's decision to ease up on the restrictions on technology transfer to China (as officially announced by the United States Government in June). As a result of this improvement in their relations, Secretary of Defense Weinberger made a visit to China in September and Foreign Minister Wu to the United States in October, and it was announced during Secretary Weinberger's visit to China that there would be an exchange of visits between the two countries' leaders.

At Premier Zhao's visit to the United States in January 1984, the two sides affirmed the significance of improved relations even as they recognized differences in their positions. Among the specific results coming out of Premier Zhao's visit were the signing of the Accord on Industrial and Technological Cooperation and the revision of the Agreement on Cooperation in Science and Technology.

The present Chinese leadership seems to be seeking improvement in its relations with the United States, despite the differences in their positions, because China hopes for United States cooperation (e.g., technology transfer, natural resource development, and trade) in pursuing its top-priority economic modernization program and recognizes the strategic role which the United States plays; and it is generally assumed that, barring some dramatic change in the domestic or international situation, China does not want to see any major setback in its relations with the United States.

(b) Looking at Sino-Soviet relations in 1983, the Deputy Foreign Minister level talks resumed in October 1982 with the purpose of improving relations continued to be held alternating between Beijing and Moscow: the second in March, the third in October, and the fourth in March 1984. In non-political fields, there was a gradual but recognizable expansion of relations as seen specifically in the trade increase from 1982 on and the increase in the number of student exchanges, sports exchanges, cultural exchanges, tourist visits, and exchanges of various experts.

In February 1984, Chinese Vice Premier Wan Li visited the Soviet Union for General Secretary Andropov's funeral (Foreign Minister Huang Hua having attended General Secretary Brezhnev's funeral in November 1982) and, meeting with First Deputy Premier Aliyev, expressed China's wish for better relations with the Soviet Union. Likewise, General Secretary Chernenko touched upon relations with China for the first time since his inauguration in a March speech for the Supreme Soviet election, saying, "We have consistently supported the normalization of relations with China," thereby making it clear that the Soviet Union is continuing its positive stance toward China.

However, it is assumed that basic differences remained unsolved through four rounds of deputy ministerial level talks between the Soviet Union and China over the so-called "three conditions" presented by China (the three conditions being (i) reduction of Soviet forces on the Sino-Soviet border and withdrawal of Soviet forces from Mongolia, (ii) withdrawal of Soviet forces from Afghanistan, and (iii) cessation of Soviet support for the Vietnamese invasion of Cambodia).

There were also other developments indicative of the complexity of Sino-Soviet relations, including the abrupt postponement of First Deputy Premier Arkhipov's May 1984 visit to China at a time of intensified Sino-Vietnamese border conflict and improved Sino-American relations as manifested by President Reagan's visit to China.


(2) Situation in Asia (including Oceania)

(a) In the Republic of Korea, there was a series of incidents from May to September which cast doubt upon the government's authority (including the various financial scandals and the hunger strike by Kim Young Sam). In addition, the people were shocked by the KAL incident in September and the Rangoon incident in October. As well as drastically reshuffling his cabinet in October, President Chun Doo Hwan acted decisively to improve the political climate, including removing the restrictions on political activities by some people in February 1983 and 1984.

The Republic of Korea has worked hard to improve its relations with communist countries and non-aligned countries, and has achieved notable success in, for example, its handling of the CAAC airliner hijacking in May and the China-Republic of Korea sports exchanges. These efforts were somewhat affected by the KAL incident and other problems such as the absence of some communist countries from the International Parliamentarian Union (IPU) Congress and the suspension of President Chun Doo Hwan's trip to Asia-Pacific countries in October. In November, President Reagan visited the Republic of Korea and reaffirmed United States support for that country.

In North Korea, there were conspicuous moves both domestically and internationally to pave the way for Kim Jong Il's succession, while some developments were seen which indicated political instability within the government. As for North Korea's economic performance, the January 1984 New Year's Message by Kin Il Sung, like the 1983 message, contained virtually no specific references.

While its relations with the Soviet Union and China were the basis for North Korean diplomacy, closer relations with China were evidenced in the frequent exchanges of high-ranking visitors. On the other hand, North Korea's international standing was severely damaged by the Rangoon incident and, following that, the severence of its diplomatic relations with Burma and some other countries.

Although North Korea apparently moved to amend its external relations in early 1984 as by making a proposal for tripartite talks with the Republic of Korea and the United States in January and a proposal for a united Korean Olympic team in March, these moves did not lead to a resumption of substantive dialogue between North and South as the Republic of Korea continued to demand a satisfactory explanation for the Rangoon incident.

(b) The Cambodian problem remained deadlocked in 1983 as in 1982. Although the ASEAN countries continued their efforts to resolve the problem, as in the September joint appeal by the five ASEAN Foreign Ministers, they maintained their basic insistance on a Vietnamese withdrawal and Cambodian self-determination. On the other hand, the Vietnamese side continued to seek acceptance of the current situation in Cambodia as a fait accompli. During the dry season from the end of 1983 to early 1984, the military offensive by the Vietnamese forces in Cambodia was considerably delayed (not starting until March 1984 even though such dry-season offensives usually start around January) and the interim saw diplomatic offensives by Vietnam (including Foreign Minister Thach's visits to Indonesia and Australia) and active guerrilla warfare against Vietnam by the Democratic Kampuchean side.

As in previous years, there were no basic changes in Vietnam's relations with either China or the Soviet Union in 1983. Although Vietnam proposed a resumption of the China-Vietnam talks in abeyance since late 1979, the dialogue between the two countries continued suspended because China made Vietnam's withdrawal from Cambodia a precondition for the normalization of the relationship. In Vietnam-Soviet Union relations, there were exchanges of high-level visits including the visit by Secretary General Le Duan to the Soviet Union and the visit by Soviet Politburo member Aliev to Vietnam.

There were many significant developments in the ASEAN countries, particularly the political situation in the Philippines in the wake of the August Aquino assassination and the worldwide attention which it drew. Frequent and active anti-government rallies and demonstrations were held in Manila and elsewhere calling for President Marcos's resignation and for democratization during this period. In response, the Marcos administration showed a somewhat conciliatory attitude such as promising the impartiality of the board probing the Aquino assassination and revising the election law. Although the opposition parties made gains, the government party ultimately held on to its majority in the May 1984 election for the Batasang Pambansa.

(c) In Southwest Asia, there were a number of favorable developments for regional stability in the first half of 1983, including the improvement of relations between India and Pakistan culminating in the convening of the India-Pakistan Joint Committee in June and the formal inauguration of the first meeting of the South Asian Regional Cooperation Council in August. In the second half of 1983, however, many countries of the region experienced domestic political difficulties (including the ethnic disturbances in Sri Lanka, the anti-government demonstrations centered in Pakistan's Sind Province, and the Sikh campaign for greater autonomy n Punjab State, India). These difficulties led to discord in relations between India and its neighbors.

In March, India hosted the Seventh Conference of the Heads of State or Government of Non-aligned Countries in New Delhi and embarked on active foreign policy efforts as chairman of the non-aligned movement. However, there was little change in India's relations with the major powers outside of the region. While the traditional framework continues to be one of India and the Soviet Union versus Pakistan and China, the United States has intensified its support for Pakistan while also trying to improve its relations with India.

(d) In the March general election in Australia, the Labor party gained control of the government after seven years in opposition. The three pillars of the Hawke administration's policy are (i) maintaining a posture based on realism, (ii) emphasizing national consensus, and (iii) preserving continuity. In foreign policy, the new administration has emphasized closer ties with the neighboring countries of the Asia-Pacific region (clearly stating its identification as a member of the Asia-Pacific community) as well as with the United States, Japan, and the other major industrialized countries, and at the same time has stressed close dialogue with Vietnam on the problems of Indochina.


(3) Situation in North and South America

(a) In 1983, despite its economic recovery, the Reagan administration faced such major domestic issues as huge budget deficits and environmental and social-welfare problems and was under pressure to deal with such difficult foreign policy questions as its relations with the Soviet Union, Middle East issues, and the Central American problem. Yet public support for President Reagan showed an increase in 1983, partly due to his handling of the downing of the KAL jetliner and the Grenada invasion. It was against this background that President Reagan announced his decision in January 1984 to run for reelection. On the Democratic side, former Vice President Mondale, Senator Glenn, and Senator Hart all announced their candidacies, with the July Democratic convention nominating Mondale and Representative Ferraro as the party's candidates for President and Vice President respectively.

(b) In Canada, Mulroney was selected in June to head the Progressive Conservatives (the largest opposition party). On the other side of the aisle, Prime Minister Trudeau (of the ruling Liberal Party) announced his resignation in February 1984. Former Finance Minister Turner succeeded him as head of the Liberal Party and Prime Minister in June and promptly announced a general election for September 1984.

(c) In Central America, where the situation in El Salvador and Nicaragua in particular remained in a state of flux, the Contadora group (Mexico, Panama, Columbia, and Venezuela) embarked on a peace initiative in January 1983 in an effort to resolve the problems of Central America through dialogue and negotiations. After a series of conferences at the Foreign Minister level (including another five Central American countries), the Document of Objectives (a compilation of the various relevant proposals) was drawn up in September and the Document of Measures (setting forth the procedures for drafting a treaty) in January 1984; yet apart from procedural matters, there exist intricate conflicts of interest among the countries concerned and, as a result, the roast to peace is expected to be a difficult one.

United States President Reagan took both hard- and soft-line policies toward Central America. On the one hand, he stepped up military assistance, staging joint military exercises in response to the leftists' surge and sending troops to Grenada (in November), and on the other hand he dispatched Ambassador Stone as his special envoy to dialogue with the parties concerned in the region. On the basis of the report of the bipartisan Kissinger Commission, President Reagan sent Congress a bill in January 1984 entitled the Central America Democracy, Peace, and Development Initiative Act.

(d) South American countries continued to face unemployment, inflation, cumulative external debts, and other serious economic problems in 1983, all of which obstructed smooth implementation of their policies and created political and social instability. This was particularly true in Brazil, where the government's wage control policies and other austerity measures provoked a strong reaction from opposition parties and workers that included strikes and riots. Toward the end of the year, however, wage controls came into force with modifications which proved effective in attenuating opposition to a certain extent. In Argentina, growing pressure against the military government which was responsible for the Falkland Islands (Islas Malvinas) war and public discontent with poor economic conditions hastened the transfer of power to a civilian government and the formation of the Altonsin government in December.


(4) Situation in the Middle East and Africa

(a) Owing in part to United States mediation, an agreement was signed in May calling for the withdrawal of Israeli troops from Lebanon. Syria's opposition and the disturbances within Lebanon, however, prevented it from being implemented. As the situation in Lebanon further deteriorated, President Gemayel, under pressure from the Islamic sects and other leftist forces, abrogated the agreement in March 1984. In the meantime, Israel withdrew to the Awali River (southern Lebanon) in early September in the face of rising public discontent at the human and economic costs of maintaining a presence in Lebanon.

Although clashes between the leftist forces on one side and the Christian and other rightist forces and the government forces on the other intensified since the start of the Israeli withdrawal, a ceasefire agreement was concluded on September 25 through Saudi Arabian mediation. However, there was no conspicuous improvement in the situation, and it even became somewhat more strained when the United States and other MNF participant countries rallied their fleets off the coast of Lebanon.

There were, however, moves seeking a political settlement based upon the ceasefire agreement, and the first National Reconciliation Conference was held in late October, albeit without achieving any concrete results. Since February 1984, the situation has developed to the leftist forces' advantage, as illustrated by the resignation of the Wazzan Cabinet, the occupation of Western Beruit by leftist forces, and the withdrawal of the MNF.

Although the second National Reconciliation Conference was held in March immediately after the abrogation of the Israel-Lebanon agreement, conflicts of interests among the factions continued to impede a political settlement.

(b) Talks between Jordan's King Hussein and Palestinian Liberation Organization (PLO) Chairman Arafat began in response to President Reagan's proposal of September 1982 and the Fez Charter. However, Arafat was unable to obtain a mandate for further talks from the PLO Executive Committee at the February Palestinian National Council meeting, and Jordan announced in April that it would suspend negotiations with the PLO.

With the peace process initiated by President Reagan's peace proposal stalemated, the anti-Arafat factions within the Fatah rebelled in early May, driving the Arafat forces to Tripoli in Northern Lebanon and eventually forcing them out of Lebanon in late 1983.

Militarily defeated, Arafat strove for a political comeback through talks with President Mubarak of Egypt, a moderate Arab country, in December. Among the developments seen in early 1984 were the resumption of the Jordanian Parliament joined by representatives from the West Bank in January, the readmission of Egypt to the Organization of Islamic Conference, and the visits by President Mubarak of Egypt and King Hussein of Jordan to the United States in February. Talks were resumed between Hussein and Arafat late in February, but there was no specific progress made for achieving peace in the Middle East.

(c) As for the Iran-Iraq conflict, the ground battles remained stalemated in 1983, yet the tension in the Persian Gulf grew in the fall when Iraq acquired Super Etandard fighter-bombers and Iran responded by giving warning that it might block the Hormuz Strait.

In 1984, Iraq stepped up its attacks on shipping in the vicinity of Kharg Island in response to the Iranian ground offensive. In retaliation, Iran shelled tankers which were on their way to and from Arab countries in May. Concerned over this deteriorating situation, the Gulf Cooperation Council (GCC) countries criticized Iran's attacks on shipping. With the expressions of concern by Western countries and the adoption of the United Nations Security Council Resolution, there was a temporary lull in the attacks on shipping in June 1984.

Also in June 1984, the two countries agreed to the United Nations Secretary-General's initiative for halting attacks on civilian population centers.

(d) Despite the presence of over 100,000 Soviet troops in Afghanistan, there was still strong anti-government guerrilla resistance throughout the country and the situation remained unstable. Although the United Nations took the initiative in mediating for a political settlement (in Geneva in April and June), no final agreement has yet been reached.

(e) The Nineteenth Summit Meeting of the Organization of African Unity (OAU) was held in Addis Ababa, Ethiopia, in June (with the participation of all fifty member states except Lybia) and adopted resolutions such as that calling for a referendum in Western Sahara. However, no fundamental solution was found for the problems of Western Sahara and Chad.

In Chad, former President Queddei launched an attack in June with Libya's support and seized control of important sites in the north. In response, the Habre Government fought back with arms supplied by France and emergency military assistance from the United States. Neither side having a decisive edge, the military situation came to a standstill with the territory virtually divided into the north controlled by Queddei and the south controlled by Habre.

The question of Namibian independence was at an impasse over the issue of the Cuban forces' withdrawal from Angola. But, with the active support of the United States, dialogue started between South Africa and Angola in February 1984 and the Agreement on Non-aggression and Good Neighborliness was signed between South Africa and Mozambique in March. In November 1983, the South African Constitution was amended to grant political rights to colored (mixed-blood) and Asian people.


(5) International Economic Trends

(a) With the United States in the lead, the industrialized economies began to shake off their three-year recession in the wake of the second oil crisis and start on the road to recovery in 1983 (2.4% real GNP growth over the previous year for the OECD countries as a whole), although economic performance differed from country to country. However, the United States recovery coexisted with such difficulties as high interest rates, budget deficits, and trade deficits, and unemployment remained a serious problem in many European countries.

While there were signs of a recovery in world trade (2% volume increase in 1983 over the previous year), differences existed among regions and industries and protectionist moves persisted (including passage of the Local Content Bill by the United States House of Representatives and the European Community's raising tariffs on digital audio disc (DAD) equipment) in the face of continued high unemployment and other difficulties. Structural rigidities in the industrialized economies are thought to underlie these problems with fiscal deficits, unemployment, and protectionism.

(b) The recovery in the industrialized countries spilled over to the Republic of Korea, Taiwan, and some other developing economies, but not yet to the large number of developing countries beset by reduced export earnings, worsening terms of trade, and other economic difficulties. Given this situation, the Sixth Session of the UNCTAD, held in Belgrade in June 1983 with Development and Recovery of the World Economy as its central theme, reaffirmed the increased interdependence between North and South. Regarding the global negotiations (GN), a two-phased approach was proposed at the Seventh Conference of Heads of State or Government of Non-aligned Countries held in New Delhi in March and unofficial consultations continued between North and South at the United Nations to clarify that proposal.

As of the end of 1983, it was estimated that the developing countries' cumulative external debt (including short-term obligations) was $810 billion, a figure threatening world economic stability. International efforts were under way to cope with the problem, led by the International Monetary Fund (IMF) in cooperation with the governments of both creditor countries and debtor countries, private banks, and other international financial institutions including the World Bank, and among the measures taken were moves to strengthen the IMF's liquidity position (including quota increases under the Eighth General Review and augmentation of the General Arrangements to Borrow (GAB)).

(c) Oil demand in international oil markets decreased in 1983, strengthening the downward pressure on prices. The Organization of Petroleum Exporting Countries (OPEC) convened an extraordinary meeting in March in London and agreed to lower the government selling price of marker crude from $34/barrel to $29/barrel (the first price cut in OPEC's history), to set their production ceiling at 17.5 million barrels/day, and to allocate production quotas for each OPEC member. The oil market remained glutted, however, due in part to energy conservation, the development of alternative energies, and other efforts on the part of the industrialized countries. As a result, the Free World's dependence upon OPEC oil slipped to 41.8% in 1983.

At the same time, the industrialized countries, concerned at the escalation of the Iran-Iraq conflict, began to make a study of contingency planning in the International Energy Agency (IEA) and other forums focusing on the possibility of drawing down their emergency stockpiles.


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