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(EKONOMIC) | REVEW J || vorm ,
Published by The People's Bank Research Department 48, Park Street. Colombo 2, SRI LANKA
Reilie Dui Hii
62
NEXT ISS
ONOMIC REVIEW is intended to
w C- RQU\es knowledge of and interest in the A y and economic development B by a many sided presentation of O reportage, facts and debate O E ONOMIC REVIEW is a community broject of the People's Bank ints, however, are the result of considerations only and do COVER AR
U. views of the 夏a authors and do not represent the institutions to which they are atta Ched M Similar contributions as well as bo Connents and viewpoints are welcone äb
THE ECONOMIC REVIEW is published monthly and is available both on subscription and on direct sale.
 
 
 
 

Number 2
May 1975 . y 3ܛܨ ܢ
இ
C3ܓ
p"
*、 CONTENTS
-
- كمي .
ي؟
巽 FEATURES
-
Alfeindis 27 Appropriate Technology,
Under-development and Over-development
Oilt 30 Population and Cannibals
COVER STORY
3 BLACK GOLD
COLUMNS
2. Diary of Events 16 Banking & Finance
18 Foreign News Survey 20 Tourism 21 Management "E, . ومين
*ിട്ടു
22 Industry ീജ, 23 The Economy /... 24 Commodities sé é Zö - 25 Statistics
26 Agriculture
SUE
gency Houses - their past, present and possible future.
egging for Aid - A Primer for Aid Recipients
mancipation of Women - held over from this issue
RTIST
due to lack of space.
pasena Gunawardena trained in the School of Fine Arts, Sri inka and Shanti Niketan. Exhibited in Colombo, San Paulo, ontreal, Canberra and New Delhi. Has designed numerous ok and magazine covers for publication in Sri Lanka as well as
road.

Page 2
MITC
|
2||
교
24
g
DIARY O
The 18 liitið ITEETTEtioli Energy Agency (IEA) of oil coilSLE 111ërs H. greed Ed Set 1 minimum ניTs Iחרורן וווז 11רו Tטconsumer Price T EIC LIrauge i II vest lents in ilte Tiltiwle e Tnergy st 1 L1 rices,
LL LLLLLaLLLLLHH LLL a LLLLLL LLLLHLLLL Econo Illic SysteIT (SELA) a regioTı:ILIniL bIT 24 LEhtiIATIıeric::Ar1 :ı Th til Caribbean nations (excluding the U.S.A.) was for Ellally proposed by Presidents Luis Echevera of Mexico Ellil Carlos AldTICS PCiTcz.
if Wenez Llull.
A multi-national collee corporation consisting of representatives of Mexico, Wenezucli. Costa Rica al Id El Sall Wildlich Walls f' Immed E0 regulate the coffee exports of Mexico, Centra || America : Ind the Caribbean, in an elfort to mainIain high coffee prices in the İnterli ticilal market.
U.S. Congress completed action on a non-bindingresolution calling on the Federal Reserve to promote
prosperity by easing its monetary
policy.
Presidents VeiczLiela, Columbiā and Costa Rica and the military ruler of Panama signed a joint declaration supporting Panama's claim to full sovereignty over the Pana III: Callä Zone.
UN ECOSOC Collittee on National Resources in Tokyo meets
till April 4,
President Anwar Sadat announced that Egypt Would reopen the Suez Canal to International shipping
Lynn, JL Ile 5. The: SLEZ WE5 closcid since the 1967 Six Day War with
Israel.

EVENTS
Egyptian Foreign Minister Fürinally called on the Soviet linion in U.S. 1) Tecnwene The Gene Wäl Pւtaւլ: Cրոft:Tittlւ է:
Аргil Enter Parline tary Union com
LHLaLLLLLLLaaS SLS aLLLLLLLaLaLL LL L aaaaaaaHaHHS
World's population passed 4 billion according to a consultant ittiլիել է Լիլե ԼIIlittէ Վiլtiւյլ 15,
Denmark cut its bank rate from 9%, to 8. The new filte was effective from April 7. The old Tate wits in force since in LEary 14.
TILHL Sessil of the UN CICLITTITTI ETICE: for Development Pla Illining in New York II lees till April 18.
7 Oil, բrtitlլIting and tensլIIllinբ Liens met i Paris. At the 18 nation meeting the oil producers formed a Li Lited front with the Lunder-leveloped COFNISLIIT ing CCLIITtries against the inclustrialised nations by insisting that the Summer Conférence COIRider Tirif only oil but the general subject of C0H1 ITICdities als Well.
PECOSOC III ieces is 58 Gilcral Sessions in New York.
교 6th colloquiliul IT CF in LF-regional technicians training of The C-Plan
Pened in KLälla LLUITPOLITI
9. Cormonwealth Heads of GyCITT, Tintern Eis meeting copyens in liէ Hյքլft:1.
ECCITIC RFWIEW, MA, 75

Page 3
Oil exportes og F 2 Tmainly poor
Grip per hedd 5 thoilsignid 3 - 5 | = " " " या
-L-E-IA RA
IR ATIN WE"|EUELA SALCARAEA LEYA
KUAT CATAR
JAE
GERMANY
FRANCE
ਨ।
S L S SSS DDS SSSSSSLSSS
* * 日
000ALS
UNITED STATES 2.
BLACK GC
The series t}| Cülleẹrted CL11 hät:ks in production, price increases and climba Tgies col s Lipplieš II ccTLEIlir countries towards the end of 1973, by the Arab Oil producing a Lions, las altered driatically al international payments relations. impact these measures have made Laa aLLL LaLaLaLLLLLLLaGLLL LLLL La the internal economic growth of all Countries, il round the World is Lloy, being felt, in one way or another by all nations-developed and deveoping oil exporting as well as oil IInPOIIIng,
To say, however, that the present clergy situation (it is not really a crisis) was a direct result of the political events of late 1973 in the Middle East is not merely ar. over-simplified explanation but even El misileading one. authorities ind organisations have firmly established that this situation was the final result of a long chain of events-a total disregard for energy planning and ever consumption by the major consuming countries, clertain Tanipulations by the large oil comparties ; and the many successful attempts of the petrole in exporting contes to linnit exploitation of whi:AL that Imany cases was their sible, uu S S S S S LaaHCLCLCCS aLaa LLLL S LLLL
그 후드-E",
The
Several reputed
riti fire Shi. And contTol over oil industries of լ:cյլImԼTits.
Ever siուԸ Լիt t| the growth of Ifill West was largely
lizing of these eco ducers of the Thi period which saw
cois Liller societies
the Loriscզլtent ր: Third World was rapid falls of price Third World Whil estill till of hic:
Till || || Wester
Il COITII Wii products Eike te and copper oil pr post-war criod H monopolistic pract Lowest leyel il 197 safeguarding thei Oil produ Ľers" :18ši ed in 1960, (Orga le LITT Exporting C tt3 confroIII this: Consequently fron OPEC increased
is il bal Trell Cliff , S| H. (55 vyhlich wyt
 
 
 

bUit gen 2 roUs
id committed g; % of grip
____2
tre of oil revenues the foreign owned erating in their
ld Worl WT CIL schieties if the
Incy Inies by the proEd World. This the Fapid rise of in Lhe West lind uperization of the accompanied by of produce of the It i L sEW EL TITL li cr prices of exports
Ties.
th other primary լ, etitoa, TLibber ces fell d'uring the a consequence of ces, reaching their []. M5 : Illutilis ()|| just interests un cilition Was Fornillization of Petrolinie:5– OPEC) giant monopoly.
January 1974 the the postel price lde til til U.S. | Tour times the
source. OECD and The Economist estimatics
DLD
1974 figurgs
Aid distried G5 % of grip 12 ||4 || C 2 * 凸
it
price that prevailed in January 1973. A5 a result the additional TeVCHLic of major oil exporters is es Lima el te have exceeded the 1973 level by schille S65 billion. Of this ill es Lill:1- S55 in his come from the developed countries and the billiance
$10 billion from the developing to LII tries. This dramatic shift in World income and capital distribuLion (specially the historically significant separation of capital from is association with people of West European stock) at a time. When the capitalist World was already moving LLLLLLLLSS S LaaaaaLaaaS LaLLL LaaLaS profound and widespread implications for Tiany Timore years
Oil Companies
Up till 1973 the oil industry outsile North Americal and the communist World was controlled by seven international majors (the so-called seven sisters), These companies were responsible for soille 80 per cent of all oil production in these regions, while they also controlled 70 per cent of total relining capacity. III additio II, they Were Caperating cither directly or indirectly through
long term charters, Well over 50
Per cent of the tonnage of the internationally cerating tankers. A few
3

Page 4
years ago these percentage figures were even higher.
However, these companies are international only in the sense of their operations. Otherwise their ownership is confined to just three countries —— UJ.S.A., U.K. aInd Holland.
Since the 1930's and up to the second World Warthe seven majors constituted a near cartel having agreed market shares. But effects of the war and the U.S. anti-trust legislation climinated any formal agreements anno Ing them in later years. Yet they were able to work as an informal cartel with mutual understanding over pricing policies to ensure high profits.
For many years there was serious concern in Europe over the seven international Companics' controlled system of oil pricing. The delivered price of oil in Western Europe was calculated by them on the basis of posted prices in the U.S. and freight calculated as though the oil was shipped from the Gulf of Mexico although most of it came from Wenezuela and the Middle East.
The cxistence of Such fa Wollrable prices made the oil industry highly profitable attracting several new producers in many parts of the world. In addition, in 1959 the U.S. GovernInent insisted that only 12 per cent of any year's projected demand for oil could be met out of imports. As a result of this decision many United States domestic oil Companies that had invested abroad in oil exploration to find cheap oil to be shipped home had to seek other outlets. All these producers now looked to the European Market Whose rapidly expanding economies and the increasing substitution of oil for coal was expanding consumption at a rate of 15 per cent per year.
Marketing companies and refineries which were not tied to the majors were selling oil well below the officially quoted prices on the basis of posted prices and agreed freight rates. At first, these affecled only the fringe of the market of the majors but by 1960's their business was booming. Thus the international companies too were
'4
forced to respon their own local tiye. In the Ille ments in oil expl. now creating a su
The growth in capacity and the which was eating persuaded the panies to аппount reductions in posi 1950's. Since the ties and taxes i prices this caused in the oil revenues ments. The Illow prices resulting f Inents is shown it
T
Date
January May-June February September Januагу February 15, January 20, Januагу 1, April 1. Julle l, Octobert l, October 6.
January
The posted pi fall Lutil 1970 W recorded even s reach the lowest barrel by 1970.
Formation of OP
The illediate secular fall in po

in order to keep impanies competintime Ille W inwestratic) Il earlier WeTe plus supply.
LI TpilLIS production revalent low price into their profits International co IIIa significant overall 2d prices in the late payment of royalbased on posted an immediate fall of the host governIllent of crude oil om these develop
Table 1.
formation of the Organisation of Petroleum Exporting Countries (OPEC) in 1960 whereby the producers sought collectively to enhance their bargaining power. The OPEC was able to stem further reductions in posted prices but it was not until December 1970 that the producing countries managed to achieve a consensus for collective action which enabled the reversing of the downward trend in prices. In 1973 they Were able to introduce a Inechanis III for controlling and regularisig the oil output in a number of countries.
During the period 1968 to 1973 alone the price index of industrial exports increased by 49 per cent
Tablը 1 he evolution of crude oil prices 1955-1975
of SumPosted Estimated mary 1970 Price Market Price Market
Pրict:
Sper barrel Sper barrel
193 1.93 14 1957 2.08 1.83 14 1959 1.90 1.53 18 1950 ISO | .45 12 1970 18O 1.30 IOC) 1971 2.18 1.65 127 1972 2.48 185 |42 1973 2.59 2. 20 169 1973 2.76 2,30 77 1973 2.9() 2.7() 208 1973 3.01 2.70-B.I() 208.238 1973 5.12 3.65 28
Low, Medium, High Estillated MäTilket Price S per baTrel
1974 1155 800 800 8.00 8.408.65 888
Ces continued t0 hile I market prices arper declines to lewel óf S 1.30
C
onsequence of the ed prices was the
World Bank Estimates January, 1974.
while crude oil prices declined until
1970 and then increased at a nomi
nal rate until 1973. The price of crude oil was below both the long term scarcity value in terms of depletion of reserves as well as the
cost of seeking out alternative sources of energy. This has been a significant contributory factor for the rapid industrial growth of the
ECONÓMIC REVE HAY 1975

Page 5
adwalcedi eCOI COTTies als Well as the inefficiel t I d wastefu II LI se of energy. Both factors indicate the degree to which the oil producers (like other Taw Tumaterial producers) subsidised the fillet ecolories of the West. In addition it has served to the dampel research and developlent of potentia Lises of Oil a 50 discouraging the development tյք Lico wentional substitutes,
On December 23, 1973, the OPEC meeting at Wien II:LI i Illino LIIced a posted price of SI 1.6.5 per barrel of crude oi to colile into efect from January 1, 1974. This was four times the price that prevailed in January, 1973. The new price was based ou a Tevenue per bal Trel objective of $7.00 to producer countries. The price has sinee been Extended to hold Lintil September 1975 and is expected to be extended Lill the ed af 1975. Although a revision of oil prices was long overdue as noted earlier a LLLLLL LLaLLLLSLLLLLLLL LLLLLL aLLLLL L LLLLLLH HLHHLLLLLLL other commodity prices were also accelerating at an un precedented rate, and when the capitalist World was moving towards a recession, had widespread implications for the entire World and in particular for the non-oil producing dependent countries in the capitalist World who could ill-afford such expenditure.
Ole it the OPEC countries wanted corrected was that the profits made by oil companies as well as the taxes imposed by the consumer governments far exceded the Wallie received by thcII. But the collpany profits did Illo L decline His al result of the price increase. In fact in 1973 the seven majors reaրed the 1974 rttorti whileוןם highest profiLS has proved to be even more promising as shown above in Table II.
This price relates to a reference Triglity ill of Persian Gulf origin (light oil 34 API), Prices could differ from others depending an զuality,
고
Calculated thus:
PEl Pri: | 1.fi5 Less Royalty TÉ Les3 PTr}{ll:Lily T1, Cost {1.1고
Prúisit herfort traig | ID.DE 55%, Lax F. Pius Royalty 1.46
GJETIT TIL Liki O
LLLLa0LLLLSLLS L LKLKLSLES 0O OO0
Māj0F tài
Exxon (Esso) MւյէյII
TexLC)
GL S.J., III dillä So. CalifoTTial
Totill
Perce Lage i Cleas Disci Li Lidl ii r ii II
Oil Revealues
The coil icole tries Wlich incr billi li il 1972 L
Cpec revenu
FCEG|A - FIKERIA - ECJAD OR
ALGERA,
dcyggpgd바
COUntries:
|F
Opac did W (excluding multilata Cofir
T
MALU RETANIA -- JORDAN
|ľo|C)|A
ST: OECD
 
 
 
 

Table II companies - 1973/74-profits (U.S. S. million)
1973 '' 1}74 1974
1st Quart- || 2nd QuarNet Profi 器 tero o ter o
Imtrւtilst | Intrւtist:
244).{I} 59.3 7) 842.8 46.8 65 | .4 45.4 III TE[] [] |79.1 7 27 | ||.. 36,4 SI 59 4. 54. |27
6690.O. 55 78 95
OOtLLtOO SSSSSSS LLL L LLLLLL LLLS S LLaSLS L00K
over corresponding quarter 1973. l:i ti n.
1973 is estimated to hawe s Lurged Llo S 85.2 billion in 1974. Of this SFL di is of OPEC count Arabia which accounted for nearly a :ased from $14.8 quarter of OPEC oil exports is » S 22.7 billion in estimated to hawe Teceived S. 19.4
es - Who gets thern
SLS S S S S S S S S SLS S SSS S SSS SSS SSS S SSS S S S S S S Flt|gח
இ t
ited Star,
LEA, - OECD
CIʼW2TC] g2
属 of the Jited Arub Emirutgs GA50'N - WEFIEJELA Sorry Abu Dhabi Belongs to Opiz:
"ho got it Ird did of $240 in commited $572m disbursed in 1974) Tit. Its 7
ESE Disbursgd 1974
ELL) էլ I': Tםtdl: 2C5ח
EGYPT SRI LANKA — MAURETANHA
BANGLADESH SOMMALIA 淞 MORC (CCC)
JORDAF
STYRIA
YEGYPT
OTHERS PAKISTAN

Page 6
THE Licintiniting fall in prices (if (hil for the producers inci the contin Liing rise in prices of Illanufactured articles of the West circlerist the basic relationship between oil cons Lumlers and producirs till the early years of this cleciatic. III describing the changes that have occurried within the las few years o LIT sources of in Fo Tillä tion EL Te... by WieW of our still neo-colonial position, largely those supplied to us by the same forces that keep us in this incocolonial bondage. Thus, most of the Häitä Wilable il Sri Lal T1 kl. 01 the economics of oil, are those provided in the language of our for Tier colonial masters and produ Ic:- cd at Anglo-American centres. ConSequently, in analysing a situation were a conflict of interest exists LaLaaL S LaaLL L S SS aaaaLLLLLLLaaO S S LLLL aa Third World (like the present oil situation), We_ -L re still governited by the colsLain Ls fa colonial sit Llation.
Net only does court i Informatie 1 stell fTorll Le West, but ils cur
modes of analysing it. The economic
El Ialysis prevalent in centres of есопопic analysis in Sri Lanka still
are unconsciously motivated by the
fictitious concepts of an efficient resource allocation by the assulled Il eutral IlleghanisIls of the Illarket.
But in our bondage and il ou r inaccessibility to correct data, We hawe many companions. The saga of exploitation by the oil companies is peppered by numerous instances of political chicanery, strong a Till tacties, and blatant lies plur Weyed by the strong on the weak nations.
ThLI5, When i E1 19654 Sri Lärhkä nationalised the largely U.S. based oil companies and offered coil pensation, this offer was refused in the J. S. CLL Ta| "aid". In Trail wher the Mosadeq govern Ilment atten impoted to nationalise foreign oil interests, the government was overthrown by an oil embargo carried by the Iloilopolists. III CLI bal Standard Oil refuscite resine che per cil from the
U.S.S.R. ård when as a consequence, the Tefinery, was Flationalised,
NEO
COLON
|llւ: Ա.S. It:1ւ:Tut! Lactics which inici. trakle, a mayal ble
Elvision.
An import. It compli nies warfar tlլIcurs, as well Hւ misleading Lu se of էjn Lilitir IIlfthrilitiլ jections of deman III || III-L || || 10 indirectly depen Lalka). Such in be directly sourci. panies, but will r. through sccմndar World Balk, T 3 լtst the tiIrc::L im| by oil companies
Fälse inforIllt tancy and skilled esse Liail acci) LI TIL i companies. The Stock-holders II they are prosperi T1lers yet another the oil industry in profits of $3 billic but reported only tax office. As C. Bilik CbIsIETyek holders they W. clothes, for the t Tāgs.
The power of allowed these C information iլէյլ: spread of oil T. this; iTTf3 TITEL tiCJI
WI1 to be disc Goverient Ill Thus, recently the 5 Lued the Exxol Էլլtil infլիrTllatiքT hiding the infor evel än Corg:LEnisa finds itself baffle lead of the C.I. Lld the Sellite Cltillfillittlee of it T.I.A. H. iii petroleum reserv companies were :
 

NIAL BONDS
with sit Tiso 1 I 1 r IT ded ebargo:51 ckle il rile
IIL if the oil e against the proconsumers is the
for inition. It is ion that most proda Indi co I ISLE Imption -socialist cilities d (including Sri formation I11äy I'll c)t Ei Lo tlic oil CoIlch the C15LIIIETS y sources like the ther agencies which for Ilation stipplied
in usage in accolin
tibiliscatio Il is a T1 Ing total for the oil y often give their e picture of how ng and the consupicture. In 1966 L'he U.S.A. 5h0Wed III tois. Itg: 0 Will books * :1.5 billitill to The Ingress Iman, Charles
"för tici Stockat their wedding axman they Weir
il corpnics has Illpanies to record LL Lhe extint and serye:5 all härd as exclusively their losed to the U.S. y Con theiT ter 11s. State of California. Company to get Tleir SllcCESS in lation is such that til like the C.I.A. | TLS EFTET A. Richard Hells Foreign Relations |lլ: Ա, S. Lilit "լի է: Eulty in estimating Es bEl Lise J.S. Cil ECreLive ild Willid
O 51-T SLC inför la Lil With
anybody.''
Because of their influence on the economy, as well as their control on wit til information the oil coTT|pa Thiès can manufactute sit Llations to Suit their ends. It is becoming clear that the "Energy Crisis" at least as far as it affected the U.S. is to a very large extel such a creatin if the oil companies. Recent evidence in the U.S. Congress and press reveal that, the "Energy Crisis at least as fai as it affected the U.S. was largely stage managed at the end of 1973 by the oil companies. This situation was due to the ability of the companies to so control the World-Wide distribution of oil EHS LO I maximise profits. (In times if surplus, it has kcp troleLī produlis of the market doing the reverse in tiles of shortage). In 1973 and 1974 the manipulated crisis in America resultied in very large profits for the conthpanies. In spilte of U.S. hall Wing Hill all-time high fuel stocks in 1974, by so timing their propaganda, as Well as with-holding and release of petroleum to the consumer, the Companics were able to Take massive profits. The surprising suddenness With which the big que Lles at filling stations in the U.S. appeared and disappeared, the quick jump in prices and company profits during the acute period of the American Energy, Crisis confirmed in many Americans mills that the While thing Was stage managed.
Another aspect of this information manipulation is the in ordinate enphasis being paid to the rapid erosion of existing fiels. A former executive of the petroleum company, OccidenEal, Christopher Rä Tid a Tind MIT, LLaaLLLL LLLLLLLaaee S S LLLLLLaLLLLLLLaLLLLL S S LLLLLLLLS given ample evidence that there is no shortage of fuels in the World. To quote Rand "the inventories of the World's (total) available fuel have been increasing rather than dininishing, even when measured against the annual rise in the Tate of the World's có15umption".
ECO FOI REHITAW, FL,' I FF5

Page 7
billion with Iran coming second with S14.9 billion. The five major Middle East producers together would account for 354-4 billion or 64 per cent of ince.
state is due to Which benefiti jections — speci eill phasis on the countries is to E
The fewer the people... Population in millions
Kol. 5o 4o o 2o 15 g
Еž|
2 άάάλάχΆ22
ABL CHAF!
TTF
KUWA
ErA SALDT ARAGA
R
RAC ALGER
FOOTHESA
... the TOT. ից:
The London Ecgfried yr His / cstillated that the OPEC countries were piling up reserves at the rate of S 115,000 per Second last enough to buy the
Bank of America in six days, IBM
Corporation in 143, and all the cornpanies listed in the World's major stock exchanges in 15 years.
During the closing months of | 974 i L wis csillättet tillät Lille COPEC Would accuTThullte reserves of S65 billion during that year despite (a) a reduction in oil consumption () a sharper rise in their imports than originally cnvisaged and (c) the Tisc in OPEC aid from next to nothing to $2.5 billion. The World Bank estimated that by 1980 their surpluses would amount to a staggering S650 hillion. The OECD considered that it would be considerably lower about S350 bi|lio I. The diference in the
cs Limates arises Troll the assumption
With regard to future prices and the volu Title of exportis.
This level of surpluses has II W.) serious implications for the rest of the capitalist world. In the first place tile s 65 billion OPEC surplus is a current balance of payments deficit to be shared by the rest of the World, THE COECD) estimated tha L. its 24-lenber countries as a group Would llave a lcicit Of S40 billion leaving a $25 billion deficit to be borne Fly the developing oil importing countries, (OECD is a collection of rich calli tries whose present Fich
ECCO REWEA, 1A, 25.
The Problemi i F
The Prise ili pri ket clinies had been subjec lizing factors collapse of the system. Comin LLIrill change in the massive an ill NILE lllllls his Ciri il Wičs term given rise to a c for the so-callet cling the dollar tlese doll: rs, billi: լիt Western tict)
It has Hec annual surplus A Talbo | Ells Ill Withdr. Will of T of the capitalis power it. At felt thilt if this spienti Arab ha C(bT1 tT:lcL We:SteTT by about 8-10 | ble si LIllicielt to post-war growL. Il y Wei[ annual 3-5 per the world Wils Wall Tills i recess price rise the f be even larger
The "recycling Էրր էլtitl titler էիt:Ill tain ht. *s
 
 
 
 
 
 
 
 

last patters if trade [ht: Tı, ' Their proally the continuous impact ofoil en por e Seen in thislight).
SLSLSLSSSMSSSLSSLSLSSLSLSSLSLS
the Wedith II 73 Ud (i thousand) | 뿌,
OECD A ERAE |974, EGIPT M.MATE
"""Recycling"
Cg (}f {}|||hĩ[ the mirLi al time Whieri Lhey g It Other IstabiLlllL li lil Ice ) :
earlier Florietary los El Tijor 5"L- he capitalist world Hills lift of dollars to
reited Illich co
ecia T13 Ilies till Els 0 TTCCTL LT13 Ing the il | Piren ble IIn of "receys: Llitis, of getting k in La circuito El
Ilies.
estinia Led LEL in of S65 bilo III
counts to roughly a
|early two per cent World's spending b) TE SET"yes. IL i q Li:lill tity is cft LI Ilinds as savings it will
CCC) I 10 Illies activity ET CLI it. This WCL ||
Sollwert the äVerage
1 of around 5 pics 1 oct 1710Illies Lt) : Il Ce:IlL fill. But silic. already moving to[[ ] Ec:fore - He | |ll in output could 1:11 Ihlis.
"problem for Westecolonies tied to lved" by the Arabs
spending their money in two ways. Firstly, they can spend the money to buy manufactured goods from the Western economies thus rejuvenating the lagging Western economies. This has already happelled in the case of scoile ELIT Copel. Il ecCINCITmies al Ille the recent upsurge of their lagging economies is attributed partially to the Arabs' spending power, The Arabis can also spend their miley by buying intthe Western capital Timarkets.
LLaLLaaLL LaLL aLLLLLLLaL LLL S LLLLLL schemic, the si) = called "Kissinger Plan". Untlic" this scienne the leveloped inclustrial countries she Lill LLLLLL LLaaaHLLLL LLLaLLLL LL LLLLL LHHL Tịch (OPEC chunt Fies, IIlsteadliti "safety met of 825 billion should Eble se L Lip] [[35-pro-wide oil loaris [eoembers of the Organisation for Economic Co-operation and De Welt) pillic Elt. According te the LELS S LLLLLLLLSYYCCCL SSS LLLLLSS S SLLLLLLLa Would :: Illblic the i inclusi Tial Countries 10 bor TOW as a group. SLTplus oil "cych LI. On their OW IImoney markets and the lend it to the Welker illustrial CL.II tries. This Wüuld_{1|110ull [[]] thu: :stählish Illemit Çif El Single bELİık for the Industrial World To Tirccycling the dollairs aild Would be the Only place wHere the oil producing countries can profitably invest their capital. Thus all investInert Is IT):Lde by oil producers woull! *Veritually fild Its Way to this balık This "secondary recycling of petrodollars", the paper slys. ''should put the industrial nations, rather than OPEC, in political control of the oil-money surplusses.
The "Kissinger Plan implies also that this single bank Would cooperatic closely with the International Energy Agency which his been se up by I9 rich industrial countries.
America has been in the refront for seeking confrontation with the OPEC countries. At the Summit. Conference o T (OPEC heids of stilte held in Algiers in early March, tentaLiye :agreeLmeLnts were TTh:de: (c)n hoW, to carry the OPEC. view Point ELI the Producer Consumer Conference in Paris. This latter conference held last month broke down due to the intransigence of the U.S. When it strongly opposed the OPEC plan of linking oil prices with prices of Third World prict lice generally,

Page 8
IMPACT ON SRI L
Despite the availability of a was hydro-electricity potential Sri La Inka has bicei increasingly dependent on oil as a major source of energy. Its rela Liye cheapness and the frec availability besides the easc of handling and distribution helped sustain a compound growth in consumption of 5 per cent a year since 1970. Since the establish illent of the refinery at Sapugaskande in 1969 almost all the oil requirements of the country have been refined here out of imported crude oil. Products that re Ilot used locally hawe becn exported and this has become an important source of foreign exchange carnings in recent years.
Until 1974 the refinery hals been operating at full capacity consuming 1.8 million metric tons of crude oil a year. This is equivalent to less than two days output in Saudi Arabia or half a day's production in all OPEC cultries. Production at the refinery is geared to obtaining the kerosene oil requirements of the country.
growth in the e. products thւ ու Teised from in 1971 to Rs. 1973 inti Lo R: 1974. T. S. value of impor foLIT-fold incLEH ргices. Const II1ւ:TEast met t) country which
per cent of all increased It) 20
The illport todo increa5el 1974 :5 a r:5 crude oil prices ilcTeased TOIII ;tt R |197 וןi 1974. Thus, it cha Inge o Litlay ווIנse tw0 ctטth by Rs. 540.3 compared with
The delicit account of Sr. of payments. Wi millio 1 , il 19 million by 97 increase in the and fertilizer in
TABLE
Sri Lanka :
1. Import of Petroleum
PTOLICLS
Export of petroleum products (including bankers and aviation fuel supplies)
Net imports (1-2)
Walue of all imports
| as a per cent of 4
Tride in Petrole III PT
1971 97.
4.() ISE.5
85.5 88.
77.5 97.
1985 20B:
THL S S S LlLLHHL LCLLaaH CaLHaaaLLaaaaHS
2. Central Bank Annual Reports and Staff: 3. Sri Lanka CustóII.15,
Along with the growth in ed for 56 perce consumption and the rise in tion in the c .rld market Prices the country's paymentsטw met foreign exchange իill tյIլ Լյ1] imports has been rising steadily, It Illuste. Il
(See Table 1). Despite the sizeable
it was lot

ANKA
sport of petroleum it value of imports
RS. 77.5 militյI1 35.9 IlliiiiIIiii) illi Հ. 566.2 millitill in Tp rise in the 1974 its Wills LI: LO Ehe: se in the CTL de Oil 2quent upon this il imports of the
accoulted for 9 imports in 1971
per cent in 1974.
price of fertilizer Ilarkedly during LI IL cof the rise in ... Its import value RS. 590 milion , 221.0) — ImillioI1in. le net foreig Il exon the import of Toditics increased Tillio il 1974 the earlier year.
in the CLITIL i Lanka's balance deled from Rs. 246 73 to Rs. 1171 4. In fact the let Value of petrolem ports has account
ducts
(Rs. Tilio) 1973 1974
27.7 91,7
7 37.8 350.5
|35 ) 5EE-2
715 4554
() |}}
Հiլյtlith Wւյ1, 4 Ւի 1
It of the deterioraLIT rent halance of
oted however, that inly the prices of
these LWC) COITTTIl Odities th:1t led to the Elggravitic of the foreign exchange crisis faced by the country. The prices that Sri La Inka hald to pay for three Cother essential imports = Tice, four and s Lugar — too recorded nearly large increases during 1974. (See Table 2). In fact almost all the country's imports Iliade in 1974 were at prices well above that prevailed an year earlier. This is confirmed by the rise in the Central Bank's import price index (calculated with I967 als the base year) from 209 in 1973 էր 37() in 1974,
Consequent to the rise in crude:
bil prices the domestic sales prices of all fuel oils were revised in January 1974. On an average the increases amounted to nearly 100 per cent. The effect of the price increases on the domestic consumption of oil is shown in Table 3. Total domestic consumption declined by: 21.9 per cent in 1974 compared with 1973. The sharpest declines are in the use of regularo petrol by 37.4 per cent and heavy dieselby.354 per cent. The latter was almost entirely due to the thermal power plants not being used during 1974 to generate electricity because of the higher price of oil. Auto diesel shows the lowest decline in cosumption amounting to 12.9 per cent. This indicates, il shift in t Hic use of vehicles Troll other fuel consuming types to diesel driven ones despite a decline in the mileage covered by the Ceylon Transport Board.
On the Whole the 21.9 per cent fall in consLIIlliption ill response to doubling of prices shows a Very low pricę elasticity of clemand amounting to only 0.39. This Ildicates the C8Sential. Ilät Lille of the products. It also shows that Taising the Prices of com Illodities of this nature seriously affects the Welfare of the collllInity unlike in other less essential items.
The balance of payments illpact of the oil price hike shows only its direct effect on the economy. Its indirect effect could be more widespread. This in
ECONÓMIC REVEW. Mr 1775

Page 9
Imports of Rice, FI
Ricc
Quintity : Th. tons WHILL - Rs. WIIl. C & F. Price: Rs. per to
ITILIT
QLlantity i Th. Leonis Value : Rs, Mil, C & F Price : Rs, per lon
Sugaг
Quantity Th. Lolls Will Lig: RS. M.I. C& FPrice Rs, per Lui
Total ille if rice. Illir all
Sugar ! RS, Mդ.
gludes the rise in the prices of Sri Lanka's imports, in particular intermediatic and capital goods origina ting in developed countries Where costs have rise. It is includes the resulting higher freight rates. Within the country. the higher costs of production may adversely affect export prospects,
Aid Receipts
In bridging the deficit in the balance of payments current acCCLInt in 1974, Sri Lanka receivci aid in the form of grants amounting to Rs. 254 Tillion, which is the highest amount received so far in a single year. Under the "Oil Facility of the International Monetary Fund Sri Lankal also Itgeived Rs. 271 illion.
Aid received from oil producers in 974 was confined to a twoyear accouillodation received from the Kuwait Central Bank a Taunting to Rs. 21 million. But large amounts of "Oil Aid' are on the pipeline for 1975 in addition to a grant of Rs. 47 million already received front Saudi Albil. This includes El 532 million commitment by Iran.
1972
252 1리고 544.25
E24 ו) ול
667.26
21과 25() 168.
8.
岛
to be repaid supplying tea. . Lվ էլ հ8 |Titlliւյր S32. Tillion This project is lirthcrS25 Il ed by Kuwait. low of SSis from oil pro addition Li tliE
Perol
Super Regular
ALIC Diesel Kerլյsւ:Ilt: Heavy Diesc FLI rice (Oi!
EE -A" | 5

BLE 2
pur and Sigar:197274
17 |974 Change 1974-73
Alisolute
338 297 4 - 2. I
32 798 - 47"() - 147.8
953. 2,685,82 -1.732. 十= 181。
Հի5 442 - 77 21.5 45: 938 -- 58. - 126.6 1.254.2 고, 124.20 - S69.84 -ւ ճ9.4
19C - 7, 9 34 230 11-4 , 1752.5 54:5.75 --3.733 59 23.
1,114 1966 -- 85 76.5
- - - - - -
perce : Central Bank of Ceylon Annual Report for 1974
in fou T years by 4: * ran also has pledgan and a further г. ап. urea project. to be set up with illion to be providA vastly enhanced is cxpected in 1975 in se com Illii Illes. .
H1|lւ է:
LICēTS
These aid pledges Land the casing of prices in World coniTT CHIdily markets iilay. some extent, Theliorite e foreig Il exchange TTL ble T1 i II 1975 but Sri Lanka may be compclcd to depend increasingly on foreign borrowings to IIllint in the flow of het blik: import requirements.
~_ TABLE 3
Innt Sules of Petroleum Produs
1973 1974 Pric (QLy.M., Price Qty. M. Per cent Rs. tons Rs. Լons change
747
. 575-655 81486, 1250 64416 -20.9 || ... 5.30 - 6.10 48.74 12.0) 30,507 -374
.. 2.14-2.74 279716 4.90 243.667 -12.9 132-192 209571 3.60 212757 -21.1 - 153 2.13 (8|6 46 405) 5 . - I. 23 - 1.83 ՀՀt).t:Ո4 :)L) I (58լt)7{| -17 |
Sir Ceylon Perile II Corportition,

Page 10
IN WESTMIENTS
The OPEC have been investing tier nev von Tonley in Wester CFrtill Markets in a large scille, It is esLiimated Ehitit Eircond 35 per cent of the Oil surplus estitulated It S51) billion la 5 gamle il to the Eure) dollar larket which is a generally free loney Ilarket
CF Weste TI -
Ellropa. Neary. I 11:1rter Went til
El U.S.A., Finck. Holt the sal The shı:ITE Le domestic Imoney and capitäl Himarkets in Europe. The bal: Ice. sonnething over 10 per celt, Wasleil directly to governments or placed yith international organisations.
West Gerary is a major target for oil investors because of its strong gconomy. Here, KLIwait Ebo Lught | 15 Per cent of Diriller Benz While 25 per cent of KLupp i Steel s Lubsidiary was bought by Iran for $40 million with the facility to appoint a director skor the parent KTL upp Board. Kill wait is to buy Tower Manhatt;LI1 in Paris a 28 Storcy office block Tow Linder construction for an estimated 39 milliol. These and Tilly such Luk-versio | LW: CELLI sed a la FTIli iri some Western capitals. The Union LLLLLL S LLLL aLOLHLLKLLLLa LaaK KLLLHaaLLaLLL that it will keep tabs on voting shares falling into foreign hands. In Britain the treasury announced that all fireig11 ownership of shares over 10 per Cent im List be reported... [ In France to'o any foreign investments which would lead to 20 per cent or Illore of company ownership by foreiglers Il List get Fill: Fletë Ministry appT: Vëll. But GcTTımarly and U.S.A. de Tot appear to be yet ready to seek such protectionist control.
The protectionist tendencies in the West are a strong contrast to their early advocacy of free movement of capital. Hither to such move Tents had been from the countries peopled by European Stock to other count Ties. Now With a reversed situation both protectionist and racial instincts Secil to Helve been ELTOLII secci.
OIL AND INFLATION
The capitalist World at large has been expērie:Ileilig an un precedented high rate of inflation in 1974. The years average was 12.9 per cent though nearing year's end it had Teached 4.2 per cent. Industrial countries togethet had a ritë margi
TC)
nally less with
äming individua W:15 - J שוחטxtTט טווח if 22.7 per cen. E
Нnt UK. If I U A 1 till with 7 per cent li: Ճք բrite increast: T colul Fitrics Laget F1CT price increase of a with oil exporters cantly lower 18.2 was however highe industri: cotit TII
The industrial: blaming the highel Till til USe for t
the Shi El CF Till
prices had added to the inflational Elle direct effect . Colšiçlered. This Illi indirect effects is plier effect of it should il Scı bit ti i 1 :: Il y 5 LIIch calçL thing is clear. B. rise. Llrds the It be:Ille eyidilt til E300 cilitið CCLIITILITis Will 3, in real output of 1973 would give about 4 per cent same time the pric ed to rise at SOTT is 77. a CalTitl Lladti ] ci ild : SerijLISI sinif: apparent before thi
isit Lition.
While te Te is to who is responsit in the Price level, til hawe been warning Chi ShūLld be: Tey account the rise their imports. although the oil p changcd since J. ildLLS LITiäl collIntrit Bible tij check infia fluctuait 10Il il t| CLEFTellgies in Whi his traded the I TL.5S. HIT "y, by 6 per cert sin Smithsonian par further 2 per cel
The OPEC is 5 Erichillig. Eitisilicies Il 0;

Wild di IC:5 | countries. At Elli. With it rate with Italy 19. losely following. | West Ger|11F Tiny | Luc. IV, es L Titic The less developed hid al rile of reւInd it) բtr - crit Tectյrtiing signifiբer cellt which Lll till if the
LI Irish Webel oil prices as the illitico. EBLIL
claimeit] thilt toil only one Per Ciënt a treid. If Only
of oil price is ly be truc hut the well is the IlliLill LTET SELLLTS it. It lition. But onc :fiհrt the oil prict: itler part of E973, nat the widespread Il the IndustTill howed a gTowth ver 6 per cent in way to a rate of
il 1974. AL LH clevel was expectLe slovč11 PCT CCInt 2, Il Lic words. if slower growth in Wils already e energence of the
IC 4g Cell: II. His ble for the Lipisu Tige l: OPEC contries; that the price of ised L. Like it
in the prices of They argue that Ticē Tēliled Liiուtary 1974 the :S Hlaye IlČl biččIl tion. This and the WIL: If the ch oil is priced, "Wells received. File:H1 H5 declincid ce the ending of ities decline a
this year.
been expressing l'ET Li55itti
To counteract the fall in the purchasing power of oil revenues an OPEC Werking party has Putif TWEITH three sLiggestions.
(a) A. Kiu Waili propos al tiuj link Oil prices to sari index of deablar
movements Fgiinst other U ITFELigies, SLICH H SUHE Ile operated since 1971 Intil
October 1973 when producers Fook the Power til fix Frices Llanilaterially.
(5) A more Taldical pla. En by Algeria and Iraq L. drop the dollar altogether is a basis of Calculatingprices and revel Lles Ild to SIbstitute the LIIspecified currencies possibly in the form of a petro currency local currences, or the I.M.F.'s Special Drawing Rights. -- DILI Fing the Halist Sixi months the SDR has appreciated by 6 per cent ( SDR = $1,185 to S.25). A more recent suggestion on the same Tir nes is the cistablish I 11ent of a Lified Arab currency.
(C) W, suggestion hy Irgln Libiit Chil Prices should be linked to the Tate of World Hilfilltir) Lland the cost of imports from the West.
But none of these propos als Have been adopted so far mainly at thւ: il sistence of St Ludi ATi Enill TCL titi break the prollise of holding prices Limitil September 1975. In the rica IIItime, however, Ira II HL:s cha Tiged the parity of its currency by breaking Hway frorn Ehe dollar to a direct parity with the SDR. A new rate of exchange with the dollar has been established as it consequence. OLlLaaL S LLLLLLaLLLLLLLS LaaataLGLaL S S aaaLL OLLLS Kuwait is also moving in the same direction. These may not have an in ediate cffect on oil prices since most existing contracts are in pounds and dollars but it will enable LLaLLH S S LLL S uHaOOLLLLLL S LLaaL S aHLLLLHamaa reducing the cost of their in ports particularly from the West. What all this indicates is that the OPEC is concerned about maintaining the til reverlLies.
Reyisel Estiliats Of Deficis
Despite the absence of any large
Scale official recycling plan foro OPEC.surplus the consequences have
ECONOMIC FEFIE, HAT IFF;

Page 11
En ol Ete: 11 as scorious for Westcrni economies as originally envisaged. In the first place earlier estimates of the total size of the surplus has been Tevised downwards. surplus for 1974 originally estimated at $80 billion has turned out to be "Only $65 billion. On the one hand the OPEC countries have |proʻWeld to be readier to spend than Hווt Ilg guessed i III addition to providing Hi considerable amount of aid to poorer countries. This had left only about S45 billion to be absorbed by the capital and money markets of the West. The second reason for the Tilder than expected impact is that the financial markets have Towed great deal lore robust than Wils generally supposed to absorb these fund. Based on these developments the OECD has now revisedis delicit for 1975 from S40 billion to 827.5 billion and believes that they would be in balance by 1980. The accumulated Surplus of the Oil expor Ling countries by 1980 estimated by the World Bank at S 600 billion has also been sealed down to $200-300 billion.
Two further reasons behind the revision of these estimates are the tower oil consumption (for the first title World oil consumption declined by one per cent in 1974) and the massive economic development plans now being drawn up by oil exporting countries. Iran is by far the most Sucessful III Tilanning and the Stale has augmented the expenditure in its Fifth development plan by no less bar:190 Per cent to un at some S69,000 million. In constan terms the rate of economic growth to be achieved is estimated at 25.9 per cent year. With per capita income expected to rise from S 556 to SI.521 by 1978. The present forcetists are that Iran's balance of payments would ble in the red by 1977 or 1978. Iril like fra T1 plans development on more organised Way than others and these two countries possess considerable resources of land, water and minerals outside the oil sector. For many others, however, economic activity will continue to be based om in stuitive rather than assessed needs. Potential for non-oi development, despite dreams of a green Arabia is limited. Yet as evident from recent negotiations and deals with developed countries these countries Will spend large surns of money for develբրոient,
ECOFICPI REVIEW, MA gy
The OPEC
FTC)EREGİYA ALI
(KFAED)
OPEC COLIT Տ2.6 billion of loans) in 1974 ot .ttTSחטTi ble TLinds provi Bank Hind the 1.LITIE, F OPEC countries. For Arab Ecom
ից:
="====
Petroleum
The Ear
Per le C P"J":"", /" foi
Q.
How close ר, וI/יירו חווה
Net very
Drilling st טןpTilor\
FCLIctic Els CF y well was dil Well is wirt Ffiwg go ac էlTitl if tյլII 'r TL. II UF by carly
AI ylilt exploration We riglit ni
SLIT Weys al II Cill shicilill E T}lerciall qua Il: T:T:l. W begin in t ht:rt, Wը II wild LLTI
() explorat Pälk B:isin Mi i Ilir. 15th May III sl: TE by Se W- hilye il till: Russi Wessel to ci seismic suri tlI Sewc LLTL25 Hity This vessel CE TTS OLIt is ELIT:S SELuli Southern an it "LIII c.
" " " - mo m -

ies live transfered
"aid" (grants and It of a total commitIlion in addition te tiegl Le) the World IMF. THE TE ET I funds established by
The Kiwi Fu onic Development
over the last 12 years. The Arab Fund for Economic and Social DevelopFllent with a capital of S340 billion was set up in 1972 also due to Kuwait persuasion. Beneficiaries of this are also Arab countries. The S900 million Islam Development Bank That the lite King Faisal SPOISOrcd is to concentrate on helping non-Arab Muslim countries. Malj)" contributors to the Fundare
lent $456 million Saudi Arabia (S2401), Libya (SIOm)
一一一一一一一一一一一一一一一一一一一、 Corporation Chairman says... t Vilnie Rei'ie' interriered the Chairmain of the Sri Lanka
נityTודryrrנץ"
'5" (Kr.
Elr: We to obtaining
|
far I would say.
Il Titel L the el F
LIT first exploratory Bill well, one Mille here the first test Ig it. Pesai. This Llally on shore and orditig to schedule El Titicipal LiCT is are should be coming Il:N. L. War.
sIEngl- of GLIT co|| |''N''}g T; 1 ITTT The Edric W
tests show that o Hvalilable in conIllities in the Man'e å, Te IOW about to | Toduction we|| have also called Wide tenders to cirilling of si Lc3 Cry Wells in the Firid (LITF" f" Tenders cluse o ld Work is due to tember this year. 5 collissile i seis finic survey Try LIt dific : ::S since Ilitյrւ: ProThising strukbeel identific. WIII also How LI Tweys in other El 5 Lle Wesler. d eastern waters sl:tIl.j.
l". E. R. S. R. Circo Pia Färš4’arry for
Fligli ligir fy / FF77 I this inferi
Q. Why is it that we El Tic Conta Clng For only the drilling of the 6 to 10 Tiew explora Lor, wells A. We
EllL
5:1 tissiek joll ol
HTէ: Ellero
already
is shere il/ild () III shore LIInder olur Soil. This was confirmed by the team of Russian specialists in October last year. There is no reason, therefore, forus ! tt3 shire this precious natura|| ||
source. With anyone else by offering then partnership rights. We will only pay them for sinking the Wes. On What evidence are WOL satisfied that oil is availife իսrt "' A. This has been proved by the
Lost diriling carried out se far. 1 There was clear evidence that (l) thic gais extracted From these Wells showed definite Tices of oil trapped underground (2) there were traces of oil in the rudimentary dePosits extracted in drilling (3) the li nestonte brought Li. showed signs of oil (i) the Soviet experts have told is thut they are reasonably satisfied of the existence of oil il gÜrd quam tities. Q. Do We hawe un ideal of the
qual El tities of oil for exploitation
EWHilal
A. It is difficult to say at this
Stage, but from the evidence SJ fel rit appears to be suficient at least to meet our own requiremels,
MSM SM MSSSM S SS SAS SSAS SSSSAASS SSSSAASS SSSSA SSSSSSS S SS SAA SSLL

Page 12
The exclusive Ii explit, produce lin. is; Westek II till: s: Corporation. Th exploration Hctivi
Li CITıpagnie Geler sique of France
Rellectic Scissili Tric Out Tril. A 1968, covering the lild very shallow N.W., sedimentary A totil of 38() irl. profiles of which 4 completed during purpose of this s LII Thile the sub-sur-fili ill filts, the sir F lic sedile L. i. titude of Lie T flytt i El TT | Possible presence for the accu Tm II laiti The UN EcoTTi. Aġill Bil Lil FELT teilis II of clarisil iltHif it direct the sIFWey,
III August 1968 report of the Ref. ECAFE tea IT Stätt. lity existed for the էլnd gr:18:
| I I71 : Lel III led by Prof. A. N USSR. Dept. of G after studying thesi E EL Lhee Reflecti C) employed gave re. of only the IWW sedimentary secti 10Wer horizon.5 1184 ciently examined.
Prof. Kalimin the fLILLI TE POTEgri four phases na incl a Refraction St. selected areas in N to the extent if 2 (bjectives of this
leteile the di Cambriil b:15 Ill IESS Cof -sciiiile Titi identification of it. faults in the P.
Tie III rig dar PegIT
 

ka Prospects for Oil
|ght to explore, refine pict role. In wylion Petrole LITH c Corporation's tiլ: cբtill in II: With Elle de GeophyIl recominilis: Illicc: c Survey was pril 1967 to April entire lind are: լ: IET Firլ:Ի մի լիւ: elt of the Island. : ITTiles Of Seismic 7 were it sea was [he sLIT"yey. "Thc *wcy was Lei deterSt TLICELi'll follis a tigraphic det: ils Tid the depth and st:||ine bisement crific the traip conditions oil foil and gas. Cyllissil for East provided a 5 to supervise it ric
after studying the ection Survey the "d that the possibiOccurrence of oil
Soviet specialists |. Klinin, of the tophysical Science, ! reports concluded | Seis Illic Inlethod Biblici il formatikil :locity part of thւ: In and that the d mot been SL fii
COIllended that III e should be in y: (1) Conduct of ismic Survey i II an air and Jaffnel, }() linԸ kTils. Thւ: Lir Wey Would be to pth to the PreIt aid the thickIy cover and the Lc kF13ʼWT1 :a Tici rneW. -Cirial base
ment and the sedimentary complex in order to elucidate the main features O Lhe bascITen L SETILICILITE TId that of the sedimentary complex. This would give a valid basis for the location of stratigraphic test Wells. (2) Drilling of three stratigraphic test Wells in the Mannar and liffna areas On locitionsselected (Il the results Of the Refraction Survey (3) Marine seismic survey of 3000 llic k Tills. ii he sedimentary basin of the Palk Strait and Milla in order to determine tlıc tra P : reas in the colti riental shelf of Sri Lanka. (4) Prospective drilling om land and seł Arcas if the earlier phases prove encouraging.
Under 1 contrlLLeitered in L Wit Messrs. Technoexport. Il ticam cof Soviet specialists were in Sri Lanka. during August to December 1972 to carry out the Refraction Seismic Survey. The report on this survey was Flinded to the Corporation in May 1973. This report confirmed the earlier prediction of the Soviet specialists that the crystallinic basement is deeper and that prominent lower members are present in the stratigraphic sequence. It showed that the SriLanka side of the CaLIvery sedimentary basin, namely the "PalkMannar' section, may prove rather promising for obtaining of crude oil in commercial quantities. Unlike In the Indian side. Predominance of Illa Tinc facies CJ WCT contincta Tactics can be expected here.
Ba5ed on the Tepi TL of this Tefraiction survey two drill holes locations had becil det: III lilled. W cOJIL TCL Walls en credinto WithMessrs. Tec Iloexport in October 1972 for the drilling of three stratigraphic wells. Uilder this agreement the contractors provided the coquipment and ITia terial necessary for the drilling and also provided the required technical assis
|CE.
The first test Well Wis die in 1974 and Butane and Propane gases Wercifol Inici signifying the prese Fice of oil. On thic results of this it was decided that drilling two Tore test Wells was not necessary.
The third stage of carrying out a Inarine seis Illic Stirvey Was sta Tited i II October 1974 by Technoexport.
ECGNC ICAEWIEW, T1A, 1975

Page 13
Their contract has now been extended to cover the Western. Southern and Eastern arcas of Sri Lanka where prospects for oil appear to be very good, contrary to earlier beliefs.
Work CITIT Telcctld at the Tid CF April on the drilling of in explor:-
tory production Well in Pesalai about |
ille east of Where the test Will Wils drilled Technicexport Will provide two more land Tigs to start cirilling in Delft and Pungudu thivu areas as well.
Worldwide tenders closing 15th May have been called for drilling 6-10 exploratory Wells in the Paik basin and the Gulf of MEIILT areas.
Work Con these Wells Will c) Illic::
il rolu ild September this year. Thıc Chairman of the Corporation, Mr. E. R. S. R. Coomaraswamy stated that it would not be possible at his stage to state what quantities of TLIde oil will he available but confirilled that it would be ill commercial quantities. The cost Would dePeIld on where the oil would be found-higher, on of shore Wells than the shore. But according to initial estimates it may not exceeds per barrel. The indications are LHELL the oil could be of high quality-low sulphur-Illiddle distillage type suitable foT CLT Ieeds. A Well kilo Wii iournal estinates that oil resources could be between 01-1 billion barrels oil and gas (). I to 1 billion cubic feet. But this estimation is based on an examination of the geological seatures rather than on a seismic survey.
Potential Indian Ocean Oil Resources
Billiւյll Milliւյր HEI, CF.
Gils Malagasay
Republic |- Mozambique - C - X) TIItalia. 1Кепya ... I Sulli 0.1- P. D.R. Y:Illen |- Однап — | () — (0:0) I—II ) Pakist IC-100 - O India O-O.) IO-IOC) Sri Lanka 0.1- Bangladesh -O IO-O.)
(Diff" Shire — Pag, 3.5. Ng.
-
", Aprїї 79;'ї.
ECONOMIC FLEYTIEW PLAY" I FFE
பிங்: Fப் :
and UAE (S120I Fund for Africi. bւen set up to hel A su totaling provided by Sau and Libya. Alba |11ւ III - ից կլ իtէ: I. Afi is through the A Bank-L Which
Էtill|TiԷլէեւ1 53) ։ a Lela : Icciri tritt region thTough m : Il ill Kil Tibilir:
Yet - only a f CCL InitTjcs, Te Tic: Çent of these Te Quatar, Kuwait the per capita ir Caif LH (OECD) v super rich coun populations total so that they to help Poorer cour bilittl oil revenլլէ Rs. 5.700 per All I W. per head, But th is. In tot i 1 thc s Ille
About 76 per revenue goes to 9 capit: GNP is onl is less thall oilt averige of the C CIL IF (OPEC - ICCOLIITTies, Iraill Nigeria, Indone: Who are clearly
| cմաIIIry Ըategory
GNP Per head C
FUTURE PRICE
The TecoIl c│ CLI "Tency links in
Si LIdi Arabia and
Wilder whether
Te il fact seric prices as claimed and Iran-the EW ing half the OP situation is sole för Kuwait has
pTÎCe_{}f flo tỉ| l
through the credit
offering which has below the Curren. SIO.47 as Iowa: reported that A. have introduced d to dispose of the

). The Special Arab With S2O11 is Africal col II tries. SI (I)0m of this; i5 di Arabia, Kuwait LIL half is collit1. Hall del tower il also looked after rica Development Nigeria and Libya lillioIl cach. Werles or its inlinediate any Central Ameriin organisations.
W of tElle (OPEC h. Nearly 25 per renues go to UAE, and Libya where conile cxcceeds that erage. These four Liries have Inil Lute ling 3.5 million, յld well tillord to tries. Thici T coliš S2O) 11 ||icol T. head roughly the est Gerllä GNP e est of the (OPEC : position.
Cell of OPEC oi countries whose per y S450 a year which , LCIll the S4,6{}{} )ECD; EL 1d 43 per venue goes to six Iraq, Algeria, sia and Ecuador in the developing having an average If only S300.
S
langes in their troduced by Iran, KLIWail Imákos Olle le OPEC contries is in reducing oil by Saudi Arabia countries producEC output. The what paradoxical, been cutting the 3 SITE CLI GLOITS terms it has been Incant a reduction official price of S8.50. It is also geria and Libya isguised price cuts r su Triplus.
The OECD estimates that by 1980 OPEC will have increased capacity Lo 42.8 Inillion barrels a day froTTI the 30.5 million of 1973 largely due to the 6m, b/d increase planned by Saudi Arabia and higher output by Iraq, Iran, Indonesia and Nigeria not including the 2-3 m. bild that Mexico is likely to add for its newly discovered reserves in Chiapas and Tabasco states. But if prices remain at curren L licWells the den Hindi foT OPEC oil will be 28,7 m, bld by 1980. Even at S6 the demand Would not exceed 36.8 m. b/d This projecLLLLLL S aLaa S LLLa S LLLLL LLLL S aLLaaLLL possible fuel savings. The OECD believes that OPEC would prefer a price reduction rather than Wrestle with the horny problems associated with allocating production cuts.
But one question is a won't at least some countries be Willing to accept production cuts In fact the OPEC is drawing up a scheme. Kuwait, Iran and Algeria have
Sponsored a plan which Lhey claim
could reduce output 20 per cent below, 1973 level for als long als two years, if gulls it re properly apportioned. The plan places Algeria, Equador, Gabon, Nigeria and Indonesia in a category ofstates in direnced of high oil revenues. A medium need group consists of Iran, Iraq and Wenezuela while the surplus revenue states are Saudi Arabia, Kuwait, UAE, Libya and Quatar. It is said that so far only Saudi Arabia and Quatar have not signified approval of the plan in principle. Saudi Arabia has already made large cuts to meet the drop in world demand and help maintain the OPEC sponsored prices. Anyhow, allocaling cuts could in fact be a horny problem with long term price stability remaining in doubt.
For any assessment of whether the current prices will prevail in the future, however, a great many factors should be taken into account. The most relevant among these should be (a) future trend in oil demand stemming from the current price level (E) potentialities regarding increases in supply and (c) the political coherence of OPEC.
DEMAND
(i) A major change in price is unlikely in the short term-say upto
13

Page 14
1976 Thaily because of low short ter in Price elasticity of demand. IL has become a basic necessity in El ECIJIllic Td TalLISLI tiå | SETLJICE LITE of consuring countries. Its use Tor Ilıcı bility Huels, Heating and as a. petro-chemical feedstock has reachld a degree of dependence that cannot be drastically reduced in the 510TI TETTII.
(ii) In the long run the picture is less clear and depends on the speed of technical Illivations and introduction of new sources of energy. Efforts to develop alternative s Lupplies such as North Sea and Alaska oil as well as thecurrent prices making extraction of oil from Lar sa Ind and oil shale cconomically could affect de milde TOT OPEC UTLlde. Many countries all over the World are now excavating for oil. New sources of energy, pose a greater threat to the long Lernı stability of current prices. Sonic important developlicits in this direction are (a) conversion of electricity generaltion to coal or nuclear power, (F) more extensive use of hydro electric power. (Ci) accelerated levelopment of liternatives to the interial collbustion engine and conversion of dorlestic and office heating to gas.
SUPPLY SITUATION
LIl The Sh0II. Ellld the medili III. LeTTT) In ore populous countries such as Indonesia, Nigeria, Ecuador and Algeria and possibly Iran may conLinue to expand production with KLIwait End Libya likely Lo in tensify cuts. This implies that major increases will have to come from Iraq, LLLLLaaa SL LaaSS SaLLLLLS O LLaaLS YLaLLaa Haa have on occasions referred to plans to increase output to 4.0, 3.5 and 200 million bijd respectively by 1980). The production policy of these COLLILFies will Ho Weyer, Tot het determined by technical factors but fundamentaly by political considerations both internal and exterial.
This brings us to the political coherence of OPEC. The question hinges largely can Whether an di When peace would return to the Middle East, The presence of sharp differeces is evident oil the issue of oil prices. It is well known that at the Quito meeting of June 1974 some countries such as Algeria, Iraq and WeRezuela pressed for further increas
CS While SLIdi Ar:E 20% price cut. If the it could reinforce together and restric
Ali Eller für LH fect is the Voice of C. America has sugges Cf S-7. Tilci i fill some produceTs W. FÖT IS EIlcē. El cle; litti LLld of III i e Wikielt. A || Tol & retti. Il ra in the long term Lin Wise tio expect : SITI FILII.
oil in Communist (
ANTI 1CT lig The Coll U.S.S. R. Ed C1i expanded output d years. In the Sowie tion Which 11117 tilt tons during the pi expected to double period in 1970s. 1974 : IiloLIIited Li Chinese output in tors was 20 per 1973 level. With coveries and 126 in production in th (which is in the p during the first quar exceed the destic shaTp rise il Chin: expected.
In 1975 Chira p lilio 1 : Lidols of CTL 812. I () kaj bar Tel H.. tG 4.5 Illi|||G|1 EG|18 AIL Hilter LFreic III shipped to North Wietriä til Thailand, Hongkong. The W. exports to Japan all Eo bring S7.60 m exchange.
The Soviet Unio 90 per cent of oil the East Europcan Collecoll-lle Gi. TOLI 3. Tilest II Czechoslovakia, HL Tanya II di Poland. itg: 0 , , Il Cill does sil negotiating for Sup
The SJ'EE 10 tracts to supply oi. ETT ELITETE; }

sia was seeking a - War threat lästs Het Wi || toeb Ständ L L Hie bil lilla Tket,
E COLld Hill WesJIS LITET. Tial Liðils. Led a floor price ence could lake aiver on prices. air change in the In prices is now
significant price TIT1s Ill:W LJCULIT յլլt it wմլյld Էit: major fall in the
OLIntries
IIILIList countries na haye gTeatly uring the last few t Union produc
e Lo.) 1 000 ) Thi... | |
:ritյt1 1951-55 18 during the same Daily output in 1.25 l... Lm15. 1974 at 53 mill. CeL abdye the hleitl Eifftl| |rllew dis;- per cent increase le Tachery plant roducing region) “Leer of 1974 which cicls of CHilla a's oil exports is
lans to export 8 le oil Lo Japa I al s against S12.80 supplied in 1974. Il LðIls Te tið be Korea, North Philippines and Elle if ILIde oil It is still:ted illion in foreign
In supplies nearly
requirements of
partners of the Ilmunist trading 1clude Bulgaria, Ingary, East Ger
Ruппапia having | ot import but is
lies next year.
1 has signed CCI
6 III. tons to Finland, 3 mill, Lons to West Geriliny, 1.5 min, Lois Lo FTä Ice 3Ti Jolič Illilliol Limis Llo Spain in exchange for supply of lime and bra Tidy. She is also to supply 50,3 m I1. LoI1s, to) Eastern Europe this year. 27 per cent Inore fhän in 1974. Supplies to these countries which were at very low prices were more than doubled in 1975 froT11 וזer toנן (849.50 טS21.50 t) 37 ט] 16
Exploration Begins
During 1972 Messrs. Technoexport of the U.S.S.R. carried out a Refraction Seismic Survey in the JäTIlä and MaIIII:I areas Where IL was found that sedimentary deposits CCCLITTEd. Of the Tes Lilts JFL his da Lä sites were closen for drilling of stratigraphic test wells during 1974 and 1975. Drilling progressed steadily from February 1974 and basement was reached by Immid July, 1974. During the course of this drilling The first Traces of till were detected in the Illid fluid very close to the base Hent. A radio signal received froTTI I thic base canlıp " Sputnik * a E the headquarters of the exploration project in Colombo on July 3), 1974 stated : "AFTER DRILLING LLLLLLLL S L LLLLLLL S LLLL S LLLLL LLLLLLL LLLLLL LSLLLLL LLLLOLLL LLLLHS S Z S S LLL LLLL L L L L OIL APPERED STOP SOVIET PART CHIEF CONFIRS THAT IT is SRI LANKA, CRLFDE. OTL STOP A SAMPLE "WAFAE COLLECTED FOR NALTSIS MEGSÅ GE ENTS,”
In the picture, alled guards stand by di ring blasting as Soviet technicial This Corld LLLL scis Illic oper
| T. SITET WES75 which include
tions in a lagoon of Pooneryn at the operting stages of exploration.
ECCF. R. E.E.A." 75

Page 15
Yet, the Soviet prices a wearge 29 per cent less than the average sales price at Middle East terminals. $78.50 perton. However, to cushion the impact of higher prices the Soviet Union has agreed to grant Licin year credit on favourable terms and as further compensation to pay higher prices for machinery and light industry products bought in Eastern Europe.
The U.S.S.R. also imports oil in payment for technical and other assistance rendered to many countries as well as in fulfilling barter trading arrangements.
NON-OL PRO DEWIELOPING I
For developing an adequate raw shortages meant industrialize are severely constrain prices of industr increasingly larg
ents defiits.
Fertilizer produ particular import: ing countries, hi hard hit by increa nia prices (the lat
The growing prosperity in the oil-rich Middle East States has been absorbing Ceylonese skills. Nearly 250 Ceylonese have been selected already to work on one of the many new projects now taking shape in once-backward Oman. Till recently, many of the Middle East States looked for skilled labour to the surplus workforces of India and Pakistan. A local shipping firin has been recruiting Ceylonese for Oman for a group of British-American änd OmäIl855 in Westors WhÖ Seilt their representatives here late last year to begin recruitment. Over the läst few months 244 Ceylonese ranging from surveyors, draughtsmen, building foremen, Tlechanics, masons, carpenters, clerical personnel, drivers, heavy plant operators, cooks and other doméstic alid5 have been selecci for employment in Oman. 157 have already gone over and the others will be flying out in the
ext few weeks.
Local Skills and the Oil Rich Count
Terms of emplo personnel are on a extending from monthly salaries r: to 150 or more s lified personnel, wh er grades they rang EI00 per month. are apparently fre according to the ing firin, free a tents providicci. Se Cooks hawe also il to cater to the Cey be accommodated i community of their
Word of Ceylor also their cheap
about fast and a
of May the rep ail.cother (Onların firi aröð Lund in Sri Lan
The Inspector G. of Olli is also originally from ÓIllän is a Fl a LItt: a reported operatic on at present.
ECCCTTC REVIEW, T1: 1575

UCING OUNTRIES
outries that lack materials base oil at their efforts to now likely to be d by rising World all inputs and by : balance-of-pay
ction, which is of nce to the develops been especially sed oil and all 10crup 729 per cent
ries
Iment for these | contract basis |-2 years, and inge from E100 enior and quaist for the lowe from E50 to These incoles
of tax With local recruitccommodation teral Ceyltitlest: een employed onese Who Will a closely-knit OWIl.
ese skills (and ess) has got the beginning resentative of Was looking l
eral of Police
a Ceylonese, Inura dhapura. tic state With nal Insurgency
over a two-year period). A number of developing countries have had to revise downward planned agricultural output because of problemsin fertilizer supply. Although such high price increases seem unlikely to continue in the next few years, it would be unrealistic to expect prices to return to their previous levels.
The balance-of-pay lents deficit of the oil-importing developing countries, according to U.N. estimates, is likely to worsen considerably during the next few years. A deficit of S15 to S22 billion was forecast for these countries for 1974, which may be compared with reserve holdings at the end of 1973 of S29.4 billion. Thus, many of the non-OPEC developing countries may find it increasingly difficult during the years ahead to finance the illportation ofintermediate inputs, replacement parts and capital goods.
It is quite clear, therefore, that the effects of increased import bills for oil would have far-reaching repercussions on the developing countries. One important policy question is how fast the developing countries should develop other sources of energy. The answer depends essentially on the cost of imported oil in Tclation to the cost of the alternaltives, but the issue covers a wide range of associated economic development problems. These include the question of how soon it could be done, of availability of technology and of availability of resources for in Westlinent.
These recent demands in the energy situation hawe led to the general realization that new international political and economic balances have been taking shape for some time. For far too long has the old international economic Ordet operated for the benefit of the industrialised few, while exacerbating inequalities throughout most of the Test of the World. There are now growing demands, more than ever before, to establish a new internatioIlal economic order which as proclaimed by the Sixth Special Session of the General Assembly of the United Natio 15 mL/55 b3: "EJäsed on equity, sove Teign Coquality, inte Tidependence, caT111 non interest and cooperation among all States'.
15

Page 16
Banking
Public Law 480
THE news about the unusual withdiri Walls of P.L. 480 funds recently by the U.S. Embassy in Colombo has once again aroused public inLeres in these funds. particularly in the manner and purposes for Which they are used.
Allerica for Aid. . .
It is We known that the U.S. Government has to its credit With the Central Banks in many countries large funds in local currency, These funds represent the value in local currency of food-mainly wheat and wheat flour-which is supplied To the country concerned by the U.S. Gover Illet Linder its Public Law 480 (P.L. 480). One of the objectives of this law is to supply surplus U.S. grain and allied products als aid to food deficit countries. Although described as aid these food supplies il re. Inol given free, and the aid element is present beca Lisc the receiving country is not called Lupon to make payment immediately or in the short-term in convertible currency. | Insteld, payi ment is I made in local currency and placed to the credit of the U.S. Government. With the Celtral Bank of the receiving country.
The general Linderstanding is that these funds will be used by the LJ.S. (GicbʼyerIIIE1 t f3r expenditure within the aid receiving country, and the broad purposes of such disbursements are agreed on between the two Governments. However, The public: Cơn Lrüwersies which Lake place from time to Limile in variolis aid-receiving countries show that this agreement is mot always clearly defined or strictly adhered to by the U.S. Goveril Ileni.
At various times allegations have been made in India by various politi
cal parties that the to support particul ings and alsc) diss Here in Sri Lanka, focussed once agai by the statement the Minister of U.S. Embassy, wh draws about Rs. 8. put of these furl their monthly withdrawn Rs. 2 and had sought Rs. 1.5 million ill to the Minister, th hati Ilot been alo Bank and the H: the subject of repr to the Prime Mi Thatct will Illo di by the Governmen the specific arran Węcl thctwo Goye tical level need Inc.
As local earlic present sale proc aid-mainly whea They arc funds th hawe been remit currency to the the commodity if
coll Tilcarcial Col InstilILL, Hs à me imported tountr: Illent ill foreign Tequired. Trı steallıq in local CLITTIlly, in cct With
These monies a locally by the and for this purp rupee funds are time by the Unit in Colombo.
Judging by the the Minister of appear that the a Tralilge:Isle Ills i gC. drawal of these

Finance
B.
sic III lids are Lised air political groupdelt Illo Wements. atticIn Lion hals been In on this question on May Day by Finance that the ich normally with0,000 - per month is (presumably for 2xpenditure), had hillion in March o with dra W abolII April. According clatter withdrawal wed by the Central Itter was currently esentations by hiru lister. Since this publ be sotted out tto its satisfactio II, gements made betrnments at the poliit concern Lls here.
tr. these funds reeeds of U.S. food |t and Whea['flo Lur. at inco Tiinally would ted in convertiblic oreign supplier of the transactico II was c. But, in this asure of aid to the , immediate pay
exchange is not payment is made nd the monies held the Central Balık.
re available for Lle U.S. Government, ose withdrawals of made from til Inc to ed States Embassy
statement made by Finance, it would e are lo definite Werning the withLunds. Apparently,
Lic Celtri Balk ci refuse C release these funds but it is not known whether this ability to refuse is dcrive from:l definite arrangement governing releases or from a mere understanding that there should be consultations before large re:le:5e:5 :ıTe: ila de.
... and Aid for America
Although no definite information is available regarding the purposes for which these funds may be used or whether such purposes are formally defined in ally agreement, it is known that these funds are available for rupee expenditure by the LaaLLL LaLLa SLLLLCLLLHHLLLLLLLS a Imajor item of such expenditure is the cost of running the United States Embassy and its associated organisations such as the United States Information Agency (U.S.I.A.). These funds are also used to make local payments to American experts working in this country, as well as the expenditure of American tourists in Sri Linkai.
The impact of these Funds on our cconomy is derived directly from the Illa IcT in Which thesc f'Lulds Tc accumulated and the purposes for which they arc Lised. In View of the large volu Ille involved, and the presence of the aid element, imports Lunder P... L..480 rc: Ino E Imade after calling for competitive quotations, and the selection of the supplier determined by com Inercial criteria including quality, price, and payment terms as is donc in respect of normal imports. As a result, the price paid for supplies under P.L. 480 may not be the most competitive at a given time and the quality may not be quite that which is suited for our requirements. There is also the special requirement that the concerned goods have to be carried im American flagships. The justification for over
ENHOF LEWE'W AY ITS

Page 17
l g
looking these disadvantages is no doubt the easy payment terms which constitute the aid element. At the sil The time, Without detracting from the fact that such supplics help to ease the local food situation, it I til Lust be recognised that these are surplus stocks which the U.S. Government is happy to be rid of.
While acknowledging the facts that imported flour would also have to be paid for in foreign funds in the absence of P. L. 480, timing and release of imported flour from such aid also has an impact on local productivity. the recent depressing effect on sorghum and maize cultivators after the release of big stocks of flour. including P. L. 480 flour.
The tendency to overlook commercial criterial II consideration of the aid element in the transaction may be somewhat justified if the aid element is substantial or realistic. The purposes for which the corresponding rupee funds are used locally cast serious doubts on Whither this is in fact truc. What is really taking place is that surplus United States wheat is being used to meet payments which should normally be made by inward remittances of foreign exchange.
Among the purposes for which these funds are used are the Tailtenance of the U.S. Embassy and the U.S.I.A. which is its propaganda arm. the local payments made to the very large staff at these establishments, Ipayments made to United States experts in Sri Lanka, and the expenses of ATI crican tourists. At the same time, While We have to pay a higher than market price for the Wheat because of the Waiving of commercial criteria, the varioLISSri Lanka goods and services are obtained by American citizens at competitive market prices.
胃 2CONDHIC EHE.W. HAY IP:
This was evident in
Finance
The payment i and services in Sr FETS constit Lutes cix in foreign exchan which these trial mit Led is large, t de prived of a larg exchange which i have reciciwcid. ] hariful because used by Americ pay for services Valuable goods Could halwe earle It is well know foreign communi of our antiques, W crafts and other such as heavy fi take these along they leave. In th ווחוווטט וAmerica I paid for out of P.
The vill funds for expend also encourages t American experts, for the Americal through the appi Gover IIIlcIt ch: experts of doubtf government depi institutions. () Il tions persuilding: experts is the fact for by American
Other "Aid Prog
The position b. regarding the in funds aրply in W Whole lost of |progтапппnes. Th Wils the first in aid having startet and is still one givers. Many ot Եllowed էիtill HT

Banking
rupees for goods Lanka by foreigllnors mot paid för ge. If the area in SactiOH 15 a Të p-T- len the country is amount of foreign otherwise should This is particularly rupee funds are Ils not merely to but also to buy which otherwise foreign exchange. Lihat thic Tesident y are keen buyers forks of art, handihand-made goods |Titur:, and they with then whe c case of the local Linity all thics: a Te L-IRO) Tills.
ity of large rupee LLIre irl STI Lanka.
he proliferation of
ווWסון t unkטוs I[ ]] Embassy, Working "opriate Sri Lanka nnels, to off-load Lil walue on Warious rtTitellits, li li statc of the consideraacceptance of these that they are paid ilid.
Trinin L5
riely set out above pact of P.L. 480 irying degrees to il other foreigl aid E U.S. GoyeTIT TT1c i he field of foreign H in the late 1940s, of the largest aidher countries have ld entered the field
in recent years. However, most of the other aid are deferred-play Illent trading arrangements covering a Wide range of products. The rupee proceeds of the imports are not made available for local disburstments, and the imports have to be paid for by Sri Lanka in foreign exchange at an agreed date later. The adverse impact on an econo Illy is minimised as a result, and there are hardly any subversive potentialities in these transactions.
Nevertheless, there are a few other aid-givers who finance various operations within the country, and their activities warrant careful watching due to their subversive potential. Among the most significant of these is West Germany. Recently it was revealed that 3 important institutions established in recent years with West German assistance - the Sri Lanka Foundation, Marga Institute and Rural Development Training & Research Institute are or Were at one time financed by Trusts (Stiltung) affiliated to the three major political parties in West Germany.
It is clear that our national interest and integrity demand a very coinprehensive review of Government policy with regard to foreign aid. There is no doubt that in the present difficult foreign exchange situation. the freedom of action available to the Government is very limited, alld no drastic policy changes may be practical. Even so, it is still possible to take a closer look at the local operations (as distinct from imports) financed by foreign aid, and to take the steps that are urgently needed to preserve our national,
cultural, and social integrity from the
activities of foreign aid-givers and their agents.
7

Page 18
FOREIGN NEWS SURVE
Y
The Locust and the Elephant
The Inomentous and historic significance of the last two weeks of April 1975 for the Peoples of Asia and for the world in general are slowly beginning to be realised. On the 17th of April the army of the Royal Government of the National Union of Cambodia liberated Phnom Penh. Two weeks later the World received news of the surrender of Saigon and South Wietnam.
The events in Wietnam bгіпg to a close 30 years of war in Indo-China against French colonialism and U.S. neo-colonialism. Calculations made on the basis of conventional Warfare by counting manpower and fire. power, had shown clearly that the 9dds Were stacked against the IndoChinese. In derision Western analysts therefore called this the war of he locus against the elephant. Ho Chi Minh's reply was, "Today the locust fights the elephant, but Om OTTOW the elephant will be disemibo Welled’’. What seemed then, to
- - - -
L ---
U.S. debacle in at least this, the folding Lup. The w blowing, this tim The removal of Countries from Western World. In but there is surely through Chima, Dien Bieu Phu, noW Saigon. It whether the greed
Crests in the L. again cause the C U.S.A. to fling it: II tests.
Simon Bolivar, A Timerican patri "the United State to be destined OWTWhell Amerit the Dame of libe: similar can be said Asia. The era of building which
The events in Indo-China last month have overshadowed all, NEWS SURVEY this month offers this FF7F"falls era fire in Indo-China and their implications for Asia and A
many, Words of foolish 'bravado. have now come true, Millions of Asians, some reluctantly, others gladly Will draw their l'essons fron the locusts and the elephant.
Throughout Asia, the qLI estion being now asked, is why a | gentle people like the Vietnamese who never did any harm to the American people, had to suffer such էlgմIly, death and destruction. It is iras wering this question that the seemingly coIplicated equations now floating around, become clearer. But two things are clear. We are Witnessing the dawn of it new era for Southern Asia and we are also watching the death throes of the latest in the line of the world's empire builders—the AITerican Empirc. Whiteter the expl'anations that may be put forward by the policy makers in Washington, the
S. 酥
--m mm. - - -
Monroe Doctrine
and which gather the inter-war years
cle in the post se period, is now tra
Ill Otion. As the St Tonger and cover U.S. troops had co selves in Japan,
Philippines and We El Series of island World. U.S. iv escalated to stagger El TTies and the ba: dollar and they foll to the four corners Cliphe Tunism for kee of the World ope Americal spoke of CETTEKlining Tiational
inents through an
CCITT III L-1 Tisti critisade the Dame of denice:

do-China Time'ın5 nerican empire is nds of changc are from the East. so many Asian le orbit of the y seem al zig zag, a connecting line North Ko Teal, "Innom Penh and is yet unclear of Big Business inS.A., Illily once overnillent of the elf against Asia's
the great Latin it once said ; seems somehow y Providence to a with misery in ty''. Something of the U.S.A. and American empire began with the
FM5. IFC) RENGAN on the events Feri.
in the 1830's di monument LT1 in to reach a piппаcond-World Wär Welling in Teverse : dollar became took the pound, pfl:Scolidal Licitit Ele:IllSouth Korea, stern Europe and hases around the estments abroad ing heights. The es protected the OWedi each other if the globe. As a ping the markets 1 to the titllar sterning and Eib E Italio El niñOWCassumed antisupposedly in racy and liberty.
In his career as the protector of the "Free World" President Trillan in 1945, went into attack with his 400 million dollars to establish the Greek dictatorship. Having established this European foothold and with the Marshall Plan in hand the challenge to the receding British imperialists was thrown in Iraq. Mossadeq was overthrown by the CIA and despite all attempts at the International Court of Justice, the British had lost their hold on the Middle East to the Allerical oil barons. The stage had been set for AFRAMCO) ald the other U.S. oil companies to enact the scene now being played in the Arab World.
In the hiddle of all this came the liberation of the People's Republic of China. The American ally, Chiang Kaishek was defeated and Look refuge in Taiwan. Dean Acheson spoke of the "Loss of China'. almost as if something that belonged Lo America hald becil lost. Gelerial MacArthur massed 100,000 troops on the Chinese border, but the planned invasion was called off. For a lonent Ilainland China was given up, but the myth of Taiwan as the true representatives of the Chinese people continued for the next 25 years. With the departure of China from the Wester orbit Arnerical concentrated on South Korea, where Synghman Rhce a resident of the U.S.A. for 28 years was brought back and planted on Korean soil. In the Middle East Eisenhower in collaboration. With Camille Chamonn invaded Lebanon and in
Indo-China the French received ՏԼյբբDrt.
Meanwhile, Dien Bien_Phu fell
to the Vietnamese army led by Nguyen von Gap and the French were driven out of Indo-China in humiliation. In an interview granted in 1969, Giap said, 'History doesn't always repeat itself. But this time it will. We won a military victory over the French and we will win it cver the Americans, too. Yes, their Dien Bien Phu 15 Still to COIThe. ATld it Will colle".
At Geneva, Vietnam was divided and Dicn was sit up to rule the
| ECColer|C "E", 17타

Page 19
South. He was removed in Lime by his American supporters and now 20 years later. Thieu goes complaining bitterly against the "treachery" of America on the Chess board of American ambitions. In an apparent neo-Dullesian phantasy (Dulles in the fifties had even declared neutralism immoral), the policy of conLainment was carried third tigh by a series of military pacts surrounding the crucial reas of the World. In 1954, the South East Asia Treaty Organisation (SEATO) was set up and a year later the Baghdad Pact in the Middle East and ANZUS covering Australia and New Zealand had been signed. The policy of a ring around the roses with China and the U.S.S.R. in the middle, was being consolidated. For a brief molent it seemed as if Asia was secure for Allerican business interests.
On the other side of the world, Latin America was being pushed into the se Twice of the U.S.A. The massive riches of the Latin Allerican continent had, ever since the Monroe doctrine, become coveted by American business interests. The long history of struggle and protest from Bolivar to Zapata had been suppresscd by the force of artins. The overthrow of Arbenz in Guatemala, Cheddi Jagan in British Guiana and Allende in Chile are continuing phenomenon in the straitjacket of a single policy.
Kennedy, you Ing and personable, seemingly full of hope, was projected as a saviour, but it was he who escalated Elle WaT il Wict la T1 and committed American support so fully to the regime in the South. Kennedy jettisoned Dullesian theories of containment and in his OWI anti-Co TTT1 LI nisL CITLI51 de chūsei the path of battling for the minds of people in the Third World. He set up the Alliance for Progress, under which dollars and technicians were sent to their corners of the World in the name of development. The beneficiaries of all this effort it is now revealed by numerous studies Were largely big U.S. interests and their agents in latin America. The Latin Americans dubbed this Alliance, "the Alliance for the Progress of Imperialism." For every dollar that went to Latin America from the U.S.A., three went back. Latin Annerica was granting aid to the U.S.A.
EconoMic REVIEW, May 1775
Latin Americ; become the back to dump its surp its Weath, BLE been other victim people, from the gula T Trade, ha hands of the Sp the British and tE islands of the become tropical II North Arc become victims, a Of Tum and CU Ya Inqui dollar.
The scramble f developed much European Coloni But American bul. South Africa, An bique in a big Way events of Africa Mozambique a signals of rapid carrying Africa liberation seems closer. Empires folding up.
In the sixties *"let every natio I shall pay any p assure the Surviv, liberty', policies cultural dorninat followed by the U. McArthur had be he was replaced espionage experts, programs and ". American Unive brought into the Big Business actii World. The expo Camelot, where sic spying operations sociological studi World caused diiid Ilot - end in The values of the life Were being plu through the instru Corps. There w Anlericil ild TT Fulbright wrotei scailtilal. John F. ha Wel Ebcem GWESTwas candid when has no friends, it BLI Li protesto did Inc. the programs. We multinational agen Bank became inst tive action on bichi

had apparently vard for the U.S.A. lus goods and rob EP'Òrfe, the Tchad S. The Caribbean days of the TrianFC SL1ftered at the anish, the French, LÈ ATTlericaT15, THE
Cal Tibbean hawe laygrounds for the
rich. They had Is the calypso goes, Ca Cola and the
Dr Africa, however, la fer and the old ls Still: dominated. siness later entered gola and Mozam"... Bull the recent i in Guine Bissao, nd Angola are change. The train Lic freedom and to be approaching in Africa too are
With phrases like, know that we rice . . . . . . to all and success of of economic and ion were being S. Administration. en dethrolled but ty intelligence and cultural exchange lid programmes. 'sities too were pay of dolubril ities in the Third ure of Operation holars carried Out under the guise of is in the Third HT1 LilproäT but heir cLI Ttiiliment. AImerical way of ged every where Ilent of the Peace as protest within el like Senato
բաblic albijiit Լիլ: ster Dulles may ith. Li sias Eic: ELEI he I said, "Allerical Els conly interests". I bring a halt and continued ind ties like the World III i let S ft T CLIECf of U.S. interests.
The exposes and scandals continue as the ITT scandal in Chile shows.
The events of the last month confirm the process of depletion of the American empire, We are witnessing the dawn of a new era in Asia and history has caught up with some anomalies and aberrations. There is a Wietnamese legend which says that "the era of the dragon is a bad period for mankind, but during this era, a flower is BFD the flower of the dragon. When it blooms, peace shall prevail and mankind shall go forward to happiness'. The flower of the dragon has burst on the Asian horizon and history is catching up with the anomalies and aberrations.
T
Cost of Viet war
The entanglement in Wietnam cost 56,550 American lives and S 150 billions, according to U.S. Government figures.
In the 14 years since December 1961, 303,622 AIllerical soldiers Were wounded and 2,949 Were reported missing in action. After the 1973 Paris Peace agreement, North Wietnam released 1590 J.S. prisoners some of whom had spent seven years in captivity.
The $150 billions spent is the equivalent of S 7,000 for each South Vietnamese,
North Wietnam, during the same period, received only about S10,000 milions in aid from Moscow and Peking, according to estimates from a reliable AmeriLE ST:
The U.S. Air Force dropped nearly 7.6 million tons of bombs 1 Indo-China-Ior than three and a half ties the Lotal tonnage dropped by Allied boilbers in World War Two, U.S. lost 3,700 jet planes, according to Pentagon Sthurces,
In 1965, there were 180,000 U.S. Soldiers in Victnam, Ayear later, the figure had reached 400,000. At the peak of the U.S. engageIllent, the total was 543,000.
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Page 20
ToURISM
The Plunder of Antiques
TOURISM depends on a particular relationship between countries that are rich and countries that are poor. It is also a relationship between countries with old cultures, and COLIIIIIies With Iley Cultures. Ole of the disturbing factors that has emerged from an ongoing study by the ECONOMIC RETE I folitismis a systematic plunder of the country's heritage by the new rich in the Western contries. As an examle of the type of Pol Llder that this en tills, We oficir bel3 W SOITHE: Of the important facts that have emerged in the course of olIT investigations.
Many of those vendors who up to a few years ago were selling books for local pilgrims (Wandana Poth) at the main centres of pilgrimagenamely the ruined cities-have now switched over to selling antiques to tourists. Along these antiques are Some very rare specimens (judged by stylistic grounds) which have been dbtained from temples throughout he island. According to information supplied by these vendors themselves there is a systernatic ring of suppliers-at least three really-who comb the country's temples and supply this tourist Trade with antiques. There is also a brisk sale of rare palII) leaf manuscripts (PusKola Poth). This latter trade has reached such ridiculous heights that instead of palm leaf books being solid whole, pages are cut iIlito small strips and sold to tourists as souvenirs for about Re. 11- per small strip.
At these raditional centres of Pilgrimage antiques are openly sold for foreign currency by these vendors and there is a considerable profit in his business. A former General Manager of the Anuradhapura Preservation Board who visited Alluridihapura a few Wecks ago a fler an absence of nearly five years found that there has been a sharp rise in the standards of living of these vendors arising from this trade.
The sale of antiques also goes on either directly or indirectly at almost all the leading hotels in the country.
20
Thus the foyer of EL I Hotel is all y pilly : Tı d dvertiş known antique Road. Similarly bol Itiquies at Ilma 1st clis II, AILITld Bentotal and Neg. event of antiques the hotel premise often shops adj and Which form complex) which
ride.
Most F. Lhe
Chathaifill Street { in the Colombo F almost exclusively antiques to tourist minent anLiւլIIe sl board advertising
sale of Chola bro Fantastic SLI is to London intique In וhחייו ותהווחותנcu, וזו
the CCC: sichill Tar ir1 additibI t i n stalt Lles, Illicient coj
Another examp Trade With Louiristis antique shops nea Colombo-Kandy ra Lo such a shop observe how eight El ICC. El LLL CLIETS which were till di A local collector for Ille CLItter il Lccep[ed. But sinc the Iloiley at the he Will collect it HOWEWE, i bplul 5 arrived in hour Rs. 150- each for tion of eight cutte Colle ProImised to til
Sole of the antiques to the a art often Bllidist regular supplier 0. to the Chittill SL to above is a Bud few months ago th radhapLIra arreste: suspicion of posses

Elie liller (ComLIITery prominent dis
11 dealer in CLt. there are antique ly of the leading hapura. Colombo, Ibi, Il the rare not being sold in 's itself, here Eure ining the hotels part of the hotel specialise in this
Antique shops in ind Queen Street ori arca specialise
s. Onc such protop has a display the fact that he Ilzes hälyt fetched f money in the Erkel. This shop, most others, sell c Choll börðIlzes LI Illeri) lLLS BL Illlll 15 :inci Cla books.
le of the antique is also seen in the Ir Kandy on the ja d. OII olle Visit W. WT ill
Kändlyan period of rare quality isplay were sold. ofered Rs. 60/- til his Cliffer was C: He did mot Have IT 10 Ille I Li hlc said in the fifternoon. lead of tourists later and paid the entire collecrs, including the he local buyer.
in suppliers of ntique militiglցի: monks. This a F öld Gla Bööks rect shop referred dhist Tonk. A Police in Alld : dealer om sing stolen inti
the sale of
Decapirated reads fruit starties like this ợle, nfer PrụTiểử tỉrừH"#ự rời!"# iffor(i= LLLCLLLLL S TT LL SSLCLGGGGGS LGGGGLGLL S SS SS S YS
Πirlift:"ΠΓή rr:Tr III,
ques. Inquiries, however, revealed that the antiques were sold to this dealer by the Chief Priest ofil mots) remoLe temple, There is also evidence to indicate that tourists are made offers of antiques even from well known temples, as well as from Illuse LIIS. We LTevvare fu authenticated case of a high digniLily of a well known vihar; at Anuradhapura, one of the oldest temples in Sri Lanka offering two rare Hindu sculptures to some white visitors in front of an Archaeological Department official who was travelling incognito.
lin amo Lher ca:Lisie With simila T- conmotations, a recent visitor from the B.B.C. was approached as a potential buyer of antiques by a person alleging to be an employee of a well known museum in the North Central Province. It was allegedly some of the antiques at this museum that Were offered for S:lle to the Visitor.
Apart from sales. Lo tourists Who come to the country for a few weeks. there is al much IIn orc systematic sale to foreign experts, diplomats and the like Who are here for a longer stay. Enjoying FEECs rate and very much higher incomes than the local population, they are able
ECCMCMIC REVE HA" H75

Page 21
to ou tbid any local buyer. Thus, for example, the houses of some developmental experts of Germanic origin living now in Amuradhapura contain rare statues of the early period which obviously would be сxported sitt of the country when they leave,
OLII investigations have also revealeda systematic export by Foreigners of antiques, apart from the El Illiteur exports by tourists and other Ta IndoTT) buyers. There is an Australian who regularly exports al Intiques, in addition to pseudo antiques
Which are ImanufactLITeki. This trade |
is also carried out by well known local antique dealers who export real al flitique fill Tinit Lure als Well His IllilnulLLUrgd Unts. trade in manufactured antiques imilative of the Anuradhapura, Polonna Tuwa and Kandyan periods respectively. These are sold by the vendors referred to above, but these hazırlı less reproductions are inı aıddition, of course, to genuine antiques.
There is a law that export of antiques by tourists and any others is Forbidden unless with the express per mission of the authorities concerticid. However, With the massive sale and subsequent 5xport of antiqLics going on in the country, it is obvious that this law is being floutcd openly. It is also apparent that the immunity given to tourists by Custons authorities whereby the belongings of departing tourists are hardly searched also helps in this process. If the tourisL and Custo Ills authorities and others concerned like the Cultural Department and Archaeological Department takc active steps they could take preventive actions against the rape of the country's heritage. In this article names have been indicated and leads given for L-Imer3 Lus convicticals, if I CIJElly the will and patriotism to carry these 5 LLL exist with the a Litt El Chrities cael511ԷԷrlittl,
ECCCICREE, F,
MANAG
New Approa
NLITETO LIS stud some of the Imaje ina bility of earlie tid on scielles L expectations, O stumbling blocks
inability of officit
There is Esto il ||
formal goals for for peasants (who carry thern out) to grðLI I lids. Osten. perceived by offi 5:15 viedrs tly there was Ilmu
ing and Lherefkor
Teach developme
A few weeks : Development Bo: a L. Mah: Iluppal
| tential pesantici
cialdo ET1 Which či Imajor break-throu nication gap.
Participaling
WET persons leders” f’T IT t Hic | land which are Mahil Welli water Malliveli Bo:ird Dutsiderii. DuI meeting and clos this seminärt bör In Lolls exchangco. Look place. In participants pla StTLICËLITEd Tole ; lectLi Ter: [k] :ırıldı feudal Tespect, pattern in such however, herated represented thc : by some of Lluc : seminar took a w aid the hithert | tr brtike ըլլL ( )

ches at Mahaweli Board
ies hlid highlightcd OT TU:50Ils for the peast Colonisalive up to their Il of the larges I in this was the Lldon yho Sict Llle these schemes and WT expected to
L1 (IIT). the probles as cialldom and pealcally. Consequench Tris LinderstäIIldе ап inability to it goills.
ago the Mahawl
Ti leld Sellir lama between poIltivators and offipuld possibly be a 1gh in this comml1
in this gathering esignated "village Willages around the scheduled to get first, as well as oficials äldil Wited ing the two day : il te Taction which ught about contiFälttit Lldes äidicals itially, the village ed their hither to as those normally they listened in as is the normal Tılectings. BLIL, by a priest who Icili sal Ints, als Well as utside invitees, the ery inte Testingt LITT silent peasant leadF their shells, and
indulged in a high degree of criticism of the official-peasant interaction.
Management of the People
A recurring theme in the discussions was how to hariness the reso LTces of the village for the purposes of the Mahal Weli Development Scheme. After several heated discussions and El high level of actual participation in the discussions by the peasant leaders themselves, it was agreed upon that the resources in the village. for the pLI I"pose of Imai I y Board activities, was to be channelled through a collective effort.
The consensus was that as Imuch ils possible, the hitherto Tole of officialdom should be reversed. That is, the bureaucracy should be diverted away from its earlier role of a Colonial incursion into the rights of people. It also was indicated that officialdom should not act as something temporarily fallen from heaven to Occasionally admonish the willagers bul. Inore often in practice to Dut pressure of them. On the contra Ty. it was the colsel SLS that officers should be Elsed as resource personnel by the fırıler Collective groups. That is the farmers would collectively tap the officers for the technical and other knowledge they Would hawe as an act of active involvement in the development procics5. Thus, if this sche Ille WCTks oLit, the present situation of officers descending occasionally to admonish the peasants, would change LLaL aLLL LLaaL LLLLLaLaaaLLL a LaLLLL exchange of informatic II, with the File:Slits taking the initiative and delialding the knowledge that the officers possess.
21.

Page 22
Industry
Textiles Self-sufficiency
Synthetics
The Public Sector entered synthetic textile production from the beginning of May. This was perhaps one of the most signific Hill events in the recent history of Sri Lanka's textile industry. As significant as the announcement earlier this year LLLLLL LLLLCLLHHLLLL LLLL LLLaLLLL LLLLL LLaLLLL a halt to textile imports. Both Illeasures, however, have passel virtually Linoticed.
The deeper significance of these LLLLLS LaaaLLaa LHaLLLLLLLaaS S S LLLaLLL La realized not immediately but per(thsווטוון 12-24 ver the mexLרhaps t The citrusting of synthetic textile production to the power-loom workshops, under the charge of the Department of Small Industries, is the first step into "the dollain of the private sector synthetic textile oligopoly. The responsibility that the seven power-loom centres in Lhe KILI LI neegali [District, Will [ili ke oni is LH S LGLHHLHGHHaLL S HHaS S Laa S aLaL Sector has been put on trial.
Warious views have been expressed on Why synthetics are hard to getthe que Les that for T1 outside style
of the synthetic textile distribution
points in the city, with monotonous TcgLllali riLy cWery I11(3rThir1g, h:1ye bafileld most miner imbers of the public. The general consensus, from the Consumer's point of View is that the private setter mills are either unablւ: or unwilling to Illect the people's requirements. Tese Iliilltowicers claimin that they are Werking their factories to capacity, on two or more shifts a day-and still are unable to T11 eet existing derland. The fact Teriais La LICE | colsLITer hirst for synthetics has increased intensely In Tccent Lilles. The CLITTUnt est III: Les for tյլII բաբլյlation of approximately 12 million at 2 yards of non-cattoris per person Works out LL LLL LLLLL LLLLLLL LLL HH LLLLLLL yards of Ol-cottons. The entire capacity of the Private Sector textile mills, however, is only 15 million tik), 17 million yards per annoll In. working oil it three shift basis. It is this Linfilled gap that has caused the iSSLTe.
??
The :15wEr Industrics to this H||ûy Lhe Goyo FIl ceri tres to step i yard foT These uni fւնr Լllւ:Ill thrւյլ Supplics Corpora initially will be in 2. Iliillion Lt 3 li if these Flowerliga t:{{url| T[]. The challe! civis: igel for Llı Il 1:1 ke a significa: synthetic textile of the constiller. Centres Will prod shirtings. Plans a h1 :: Il til COITIS LCC i I IIL II ried li Li L or syml this number is ex up to 12,000 by th HlIlllöllis lliw sal Tcles EL 11 i LITE) LIŠLor"
This is ide իլIt it mւյtւ Ճ| ԼելIլ this stage. There th:11 textile Tian Stille Sector wer t: 5.Lc5 3FLheit GL|GL to IT of unrespon Eee 1 lated i T1 LH Tilterials sich ils t lies Corporation : Incore i II liigina Liye Yicy CFL || 1 is si ELIEic: many of the proble ורן וחסw CשוLhis I חi
There is cleare is a growing pref Lics i Til this coLIITTI Cott. Els—they a Tę lasting, wash mort are also a part a Tills”. Evcil LH1|| Corportico III al live has cold Litlistic
DIT ELL'ALT LIII Would give some : Lits of lill-iTI I
Cotons
Though syrit lieti die III i I STi L World coins are style. Cottons a in many Wester promotional cam C) I 15 LITET LES LES . IC 110 ve cons Lu Tiipt
 

the Ministry of proble, Ilow is to mיTlotטwטלן 5"שון שוון 1. The synthetic 15 Will be obtili II
gll the Weaving tion. Production Illyוltטחיile regit] illicoli yards, BLI LI :vgרrtין קsטITוLET ווול. 1ցt tlic programmւ: 11 will certainly Ilt den ilt til: Ildustry in favour Initially, these uce only blended Te astootto engage this task-iht the dloo 11s, a Te being letic tex Lies iT1|| Jected tL be täkel Le end of this year. :ver Will produce
laterials.
El lil Lull ble step, III, TlccesstiT: II lliլs butil :widբոմ: Li filo LILI rers, ili Ehl : : In responsive L. xmers. This sympisi Weiss Illas. Elst : suppliers of raw he Weaving Supp1ll Sillu Sll. A and sympathetic In a hel Lavoid is that Will rise etitive siELIlio.
widelice that there Bree for sylley as opposed to said to be longer : com wellieri Lilly Lidl the "status sylNET to this sit Litirl essful cxperiments fcjr ccSL tills, which if the characterisFir-dry synthetics.
cs h:lye grow I in ilkil türü LIlk tHı: :ck i 1 leTiTiTillä Tid ve a higher image cities, Suitable aligns to cha Inge an possibly help ion patterns back
LO GOLLons. Ewel in Sri Lanka. I1105 upper class dress boutiques ganicTA' L-ILħII.
One of the Thajor producers of HLHLLaaaLHH S SaaaLLLLL S LLLLLLLLS aLLS Linkäl, the Neticial Textil: CTporation now produces nearly 13 Ilhillion yards of cotton textiles per
* III FILLI'm El Field is al Inlichst an El Lually adding
It its production capacity, with the opening up of new large scale Illills. S SS LLLLLLaaaL aLLLLLLLLH HLL S SLL LLLL LLLLLLLLSL Inill Hit Pugoda in the Domple electorate capable of producing 6.7 (estmated budgeted figurc) Tillion yards
CI El IIIILLIll.
The TC is slil to be Illi:JT LIELI sufficient weaving capacity in the Country Today, but the shortage lies in the area of spinning. To meet this problem two other mills are bicing set up a E MaL tegi:Anima : Eld at Minneriya änd Lhese Will concentrate oil spinning of cotton yarn. Of the other NTC plants now in operation Weyangoda produces 7.8 milition y:Lirds of cot ton (1974) :inci Taulihiriya 4.9 million yards (1974). The Other major producers of cotton LLaLLLLLLS LLLLLL KS La S 0HHaL S SLLaLLLLLLLaS Department wiLh its Pico Werlich III projects, the ower 100, CMOC) händleto Filis distributed throughout the island El Ild the private sector II mills. The heavy increases planuel für ProduLLLH L aaLLLLLL S S LaLLLLS aLaaLLLLLLLS L LLL possibly Tes Lullt i Il a lowering of ri rices to the consumer Linless the raw Im:ı terial (ccoLLon y:hTIn} is, :1ya ila hl
I che per Prices. (Livliin
In the field of cotton growing the country linius im Luchi te Full til aL LLL SLLaLLS LLLLL S LLLLK S LL LL S aaS exposed to the vagaries of the international market as experienced in the past when prices of the finished product hild to be sharply increased with Lin unprecendented increase in the price of cotton. The recent decreas: in prices of cotton textiles Wils ills it direct result if the downward trend in cotton in the World Ilarket.
Positive it in Will cell III
LLL LaLL aLLaLLL La KLLL LL LLLLL S LLLLLLaLLS Anthony, a British cotton growing
expert under the Colombo Plan,
Erlier this yer, 1551les impre.
There are ample prospects for grow
ing Cotto In Linder i Trigation in Lille Udal Wall vựE TEH
LLLHHLaLLLLL LLLKLKLuS LLLLS S 0L0LS S

Page 23
THE ECONOMY
Natio: Product in 1974
As in the cise of most athlet tieveloping :) աntries the national aaLaLaLLLLLLL LLLL LS LLLLLSLL LLLLS LLL LLalLLL only crude estimates of the total թtitբլIt of goods and services in the economy. The limitations arise partly from all inadequate coverage (e.g. activities which ATC not m1; Tikettriented) and partly from estillation procedures which involve a high margin of cror. While they may be used as rough indicators of the level - if economic activity, they are less meaningful as a basis to draw precise conclusions on the economy particularly in respect of development and ciconomic Well-being.
According to the latest Central Bank A.In Lial Report (Teleaseil 011. The 30th of April) the G.N.P. at current prices in 1974 amounted to Rs. 19,694 million, which represents an increase of 30' over 1973. However, this increase reflects largely an increase in the price level rather than output. When Tleisured at 1959 constant prices, the G.N.P. (in real termis) was only RS. 10,731 illion, all increase of 3.4% over the corresponding figure in 1973. This is roughly conparable with the performance in 1973 (3.5%) and "was considerably higher 1971 than the growth rates of 1970 and 71 (which were 0.9", and 2.5% respectively). Nevertheless, it fell short of the average growth rate of 6%, envisaged in Lle Five Year Plan. Thore Was only a Timarginal increase in the per tapita income in real terms-an increase from Rs. 784 to Rs. 8). The rate of population growth in 1974 is estimated to be 1.6%.
Prima Ty production (agriculture, forestry and fisheries) continued to bt: thị: dõm IIlält Sector in the econ= ommy With1 a. sharc of 339, in thc G.N.P. Within his sector While the Litput of the plantation sector recorded a decline (reflecting Ilainly aa aLLLLLLLaL HLLLLLLL LLLLLLaLaLLaLLaLLL LaLLL shortage of fertilizer), the output of the domestic agricultural sector (particularly paddy and subsidiary foJd production) recorded a subs
ECCINCHE REWIEW, MAY 1775
El till i Filtrē5e. էլm iIltrԷելst im ! sector by 5%. recorded il decli Live to. EUT3 ye. quarrying (reflec in geni exports) al ing (reflecting lar. importeci ra W ITma aw:hilability of bL! to) :hH1 ir1crc::ise: ir Ciclist TLIction sicci the service Sector Tate of over 5%.
DECLINE N. " OF TRADE
Given the in Lralde in the cover melts II. Lhe tel Crucial factor inf re: il colle in HdWërsë IllLWelle trade (meaning chasing power O. out the possib IIlcTę:15ę III th1: According to the in 1974, the exp by 55%, while the rose by 77%, an decline in the teTI 11". It has bee factor led to il
lational incl: Rs, I, 143 millio 10") of the G.N, other words, thi: capacity Wils los result of the of trade. A dra: city of such lag increasc in forci order to sustail of imports requil An import flow was financed by and suppliers cr
EMPLOYMEN LINEMPOM
According to the ECJ til IT ITTb

The File:L TESLIE WIS he output of this The sectors which le in output relare (i) mining Lind ting the slowdown Indi (ili) mahnıllı factLITgely the shortage of terials). Improved ilding laterials led the output of the or by over 7% and recorded a growth
THE TERMS
ortance of foreign all economy, moveTills of LT: ET Liencing the level of the country. An Il Til the LETI 15 CF El drop in the purf exports) can Wipe le gains froIl a 11 : export Yolu ille. Central Bank data. drt price index rose e inn por E price index. ld the result was a ls of trade by nearly estinated that this decline in the real - by as Illich is Which is nearly P. ITE: || 13. Il 5 : mount of import t to the country as ecline kif the terTis i in the import capanitude necessited an gin indcbtedness in hic Illi IiIILII Ieyel red by the economy. of Rs. 1,114 milliol foreign aid, loans tdit in 1974,
T ANO ENT
provisional figures. er of registrants at
eITployment Exchauges stood at 5t}5.935 tittle end of December 1974This represents an increase of 35.444 erschiis öT ihilIt 7.5' Liver the Ligre Lilie cld o Deceber 173. However, this clatac III 3 L be used LK L LLLLL LaLLLLLLLL tLLL LL LaHLS ployment situation in tle country because sile of the registriants are employed on a full-time or a parttime basis but Want other employmeit d ll remli persons do not register at : Il ployIKInt exchanges. Pär Licularly i 1 view of the extremely limited prospects tյEtaining employment through sլIch registration. In 1974 only 1,278 persons or 0.3% of the total registrants were placed in employment by the employment exchanges. During 1960-1970, 4,000—6.000 persons or 2-4% of the total registriants were foլIntl employment through the exchanges per year. During the period since 1970, this figure has dropped to less than 1%.
Whatever olher dE e Failable on unemployment arc from sample surveys undertaken at infrequent intervals. The Socio-economic survey of 1969/70 revealed an unemployment figure of 546,000 persons. representing some 1.4% of the total labour force. The Survey of Labour Force Participation Rates undertak cn by the Central Bank in the third quarter of 1973 revealed a figure of 793.000 Lunemployed Persols rcpresenting some 17% of the labour force. The figures revealed by different surveys are not strictly comparable owing to differences in the definition of unemployment. No figures are available on the extent of underer ployment although this is a widespread phenomenon in the country. The total cmployment in the public sector is estimated to have shown a significant increase in 1974. It rcbse freoIT1 595.6527 in I973 to 653,685 in 1974, an increase of 58,048 or nearly 10%. While in government departments the enployment has risen by 7.5%, the corresponding figul Te for other Public sector institutions was 3.8%. Although figures are not available. the co-operative sector, settle-lent scheles under laid refoil, subsidiary food production and the tourist industry, would have shown Il expansion1 il employment corpo Ttunities dLring 1974.
23

Page 24
COMMODITIES
TE A
Production Picks up Export Earnings Rise
Sri La Ilukil’s tea Productiç) El Which recorded a consistent declinic Wei the last seven years (with ill excepLion in 1971) has shown signs ol recovery, according to figures r.aciling the Ministry of Plantation Ildustries. These figures reveal that production over the first three ITGLills of 1975 (II (1.2 (11. Ibs.) Was Wel| ahead of th:it. Oye:T Lht:5: 117e period last year (97,5 m n. lbs.). Production is expected to pick up still LLLLaLLLLLL S L LaLaL La LGLlL aaLaL L L LLLLa coming months and there are hopes that the declining production trend of the last few years will be reversed. The production fill in recent years was is follows :-
1971 - 480. II, Ibis. 1972 - 470.6 Ill, lbs. 1973 – s5, si III, Ibs. 1974 449.8 11, Eys.
More impressive than the gain in production is the rapid increase in export wallues and quantities coveitt tille first three norths of this year. Export values increased nearly 90 per cent. While in quantities there Wils in increase of 16.6 milliol lbs. als selen in the figures below.
| ) 7 4 LI: Intil 1 tillLIւ: M. Ibs. R.S. M. Jin. 15.2 41.
FED) 4.5 Mr. 31.8 07.3
82
-
| ) 7 5
TT. 32. () Fցի: {). 59. MäTulli 35, 2.
|[]9.Ս 464.
Of the Rs. 464, illion Worth of tea exported in the first three months of this year, black tea brought in Rs.413 min., packeted tea Rs 45 min. and instant Tea Rs. 2 in.
Biggest purchasers of tea in bulk were Iraq Rs. 64 min: Pakistan Rs. 57 mm: U.K. RS. 49 mm:
USAN, IS E T R3. 3-4 II. Il The largest purel teil wils Lihy wh välill Lle CF Rs. 35
period
COC
Fresh It Oil, Fibre, Charcoil.
Exports of S coco [11] Li procł Licts tre 1 di du ring the fi this year el TTiTug L'ITF: "El Tri Rs. Լlit same perioւI lt
Coco Inuit chill es: |(788 tills. Li rii aircase of polding peried la Hi Weyer, 1 decli expøf | WHlue wh thւ բrevious year'
Desiccated ccc Էtl in incretist of aToLinling to I JHIILI: Ty-MaTch. value per LoI, he drup of 12" con period last year.
Fresli Illuts vyhi Lie. Fl III 1974. T 1975 11tl tllril The Volume Of Ex COI: T17 i III 1 TIL Its during the Cor last year. Expo Rs. I ()-4 milli mill : million during tl YCIT.
Cibi Tibb re', 'g'); Cicci-Fi LIL ckel eX heavy falls Wher same period 11: fibre exports all tons, a drop of to the sa Ille peric InLit ekel exports Lions, a drop of [c3 LE1c (CCTTespilli
IR LI
Buffer Stick Sch
The propose Stick Schele the necting of
 

11: St. Litll Africal ITII Rs. 29. In 1. laser of picketed titll bմլյght to the TilIl. during this
ONU"
D.C. p. Elkes Y NI
Ti Liulka’s. Tmilim showed rising rst tire 13ths of | RS. 128 milion 95 million during 5Llyc{1 T.
ports amounted to ng these 3 months, ', over the corresst year. Tiere was. ric of 15% in the cm compared with sfigure.
puut exports show'32", with exports |).333 էtill: tlւլring The average export յwevէ:T. Tլ։ւtirվ:{1, 1 npared to the same
cu TecCordet! El Tilshalle a recto We Fy i Il 1g January-March ports amounted to as against 428,000 resperi di Ing perick T| tāTIlĩIlgs_rost: [[} onlpared to Rs. 6.7 c sa Time pericid las L.
LL chi:Teikall i Tid ports all recorded i compare to the st year. Cocollit 1ւյլIIIttitl Lth 14,721 thout 50%, relative ld last year, Coco
Tip Il Lical L 555 early 579, relative
ding figure in 1974.
BER
eine flkes shape
| Rլլbber
ill be discussed at officials, frabını Trimai bir
Buffer.
rubbet producing Countries In Kuala: ILLI rll p Lil Trid Li ring the second week of May, This is i sequel Lo the Illecting of Ministers from rubber producing countries held in April to discuss Malaysia's proposalifor setting up ai inte Trilational Tubber bu fler stock. pile to stabilise prices. S
The Scheelvis: gesastockpil al 350.000) LSTs Cor III)'', of cu Tremt World productio II of natura | TL.bber: LLLLLL LLLLLE LLaa LLLLLaLLaLaHH L SaaaaL ELIncl. ceiling Prices for in: ELITal Tubber. The officials lecting in Mills will discuss details of these proposals ini also il coordinated iarket systell 11 Tropesetl by Malaysia, te bilI:ller fi Filised at i Illecting chif NylittisLerš Irc:111 the TLIbber prodlici Hg LLIIi LTies.
Sugar Prices Tu Imible
World sugar prices recorded theiro sharpest fall in thirteel Incinths. a.E. lī begi ig May is ir vien for the first Line sice April 3. 1974the Trice per til fell bele W E2COCH. The sugar price boil reached its peak oli Noverilber 21, 1974 wien Till tirne high of E (15C) per ton Was recorded. All forceasts low point to a still Further decline in prices on the international sugar market. Major producCrs steppičd Lip cultivation list seiso II with the hope cof cashing in оп the Hooring Tпнrke. Brazil. Mexico, Dolinic; F1 Republic. Hlyäi. U.S.A. Sol Illi Ariel IIid India are als expected to hälve record Critime hil I'vestis in the co) Illining sei 13:43, IrnThe European beet harvest is als expected to be good. The F.A.O's Sugar and Beverages Divisio 11 has foree:ist | hit “wery Favourable Weather in 1975|7ճ woLild prtitlLitt: 3, world sugar crop five or six Illillion Lons greater than in the current year."
The rapid decline in World market prices of sugar Will also leave its impact Con Sri Lanka's bill:Ince of payillents situation, the COTSLITThe price index and the drive towards greater production of Sugar and its Substitutes locally. The cil; I tities of sugar we import in the near future ahow ff our authorites brig down the cLLTrent open Imarket price of Rs. 754) per lh, caT be af tremendous significance lo Sri Lanka's sugar production drive.
ET IE, HA

Page 25
STATISTICS
Tea Prices - Colombo (Rs. per Kilo)
円
; []] |=+----
LD)
.
.
B.
High
I]
LL LLLL S S D S S S D S S DD D DDSDS S S L S S S
15.00
High
| Itiն
| 1.|]] Leifr
di T
: Liը
ħrit li
April ,효 또 דה
Rubber Prices - Colombo - Singapore - London
(Rs, per Kilo)
厝、
i. N
翡堂呜
T Li fi din
+, եւ
トー 5 Fri, rg pi-lo r"
3.50
H
Hi, DD,
EDITE E اس سے 고 ---
교.고
.
S S MTSSSLSLS SqqqS
Th April H
I교
EON OFIC REWIEW, MA' ISF75
 
 
 
 
 
 

H
Trends in Commodity Prices for period of 9 Weeks
March 8 - May 3 1975
Tea Prices - London (Rs. per i Kilo)
H High
*ಆಬ್ಜೆ HiեH
Lg yw Hadiul II
Lly
D
Freh AE FH||
唱 |
Copra Prices - Colombo - Manila - London (Rs. per long ton) R
LE F din
.N. SqSLLSS S SSSTSSqSS "I IN / | | YS
■輯一
॥
30 -
N
ISO m
|, 미
s - - - m file اس سے ィつ | 마
- - - - - - - - "טהו,ן
Murch, April Hay
g 교 |고

Page 26
Relief for Tenants of Paddy Lands
Of the twenty-two Agricultural Why did Lhe Tribunals to be set up under Section fail to serve the 30 of the Agricultural Productivity as expected? The Law of 1972, ten have already start- the Act was inade led functioning. These are intended tenants, though
[0 fulfil, HTT1øng severill [[heT Turle- (led CIl Sewer'H! (!! tions, the long felt need of giving itself was questio. security and stability to a very subs- the authority C tantial proportion of the paddy cul- Illissioners respo tivators in this country. One of the eviction cases : principal objectives of these tribunals fale and the Cul is to speed up the settlement of - the farmer in tenancy disputes. Without much en- in the face of the CL In brance to tenants. Such legally rative set up is constituted tribunals will thus implement the prevent tenants from being illegally commitment to evicted and unduly harassed by identification wit landlords in their day to day work of ficiaries - the ic Daarnaging at Ild developing the land ticial fräi The Wor they ÇLilti wate. Village lewel to iIT the Civili ( Nearly 40 per cent of the paddy to be dominated lands of this Coult Ty El re still Cultiva- the indirect lant ted Under the inde system. The ten- the line the align ancy conditions before 1958 were favour of the characterised by unduly high rents tenants were prey ELIC EX LITEIlle insecurity, The relatio- CWETI [hejr II ships built round the ande system the Paddy Lair Was often semi-feudal in character, only legal docu The Paddy Lands Act introduced in 蠶 1958 had several ambitious objecti- tliet lil Illlrls , 蠶 Tim Cong Which, the most in 11 portant tenants from doin Н51 T. HE TEпHIlúy was concerned. WHE rie - I the reduction of L he land rem L ISIS 鷺 the i raditional 50 per ccńt share of R. férera tenants produce to 14 of produce or 15 of pro||LIce AI: bushclis per acre whicheyer is less, to legal rents or provide Security of tenancy to ande er ຕ໋ອກ ိုးမျို† cultivators, to regulate rates of putting the tenan interest on inputs provided by the lantilւեrds, etc. A di Tiilist Tatars The threat of eviction is still there. "El This is why the najority of tenants ords than will have not been able to benefit from recourse to the the regulation PFLIVISIC115 thւ: WETY Tece IILy W Act too, through fear of eviction, cessible to the
kHJWTtTOddel. Several years were required to
restore an evicted tenant, who in- The Paddy Lank variably lost his only source of a very ambitious I income for his family. The legal But experience he procedure was slow and cumber- with a stroke of I some, Few tenants really had the cult to modify allt courage and the means to pursue a which have been in case. This made the tenant popula- rations in rural ar. tion lose faith in the entire Act, and minating on the ol prevented them from seeking protec- usurers, etc.), an til T L TidET IL- om the other (ten a
26

Paddy Lands Act Leila Int population legal framework of quate to protect the e-A Wis ill
CCäsiðils. The ACL led ill LHW COLIILS: IT ASSISLIL (CILinsible for settling LeTo the 5. Liwati Cittee stitution, collapsed lä W. The äärillispecially enacted to Act also lacked the objectives and The Lltimate beltIl II tis, Tile istit Lillk tei the plciment the ActCOTTILLICES — CaII by the l'indlords GT lord class. Down lent was always in Indlord class, often cited from getting Les TegisteTcd in is Register (the It to ascert; in - maintained by CCIIII liittice. Ofte wilfully prevented g so, and they were * äis laboLITEFs blit till: l'Illic: lälld tils
բtlying 1/2 shire y El LlenTip L. 10. [P:hy
·t his name regisel i Ti c’yiti t in a Worse plight.
themselves, having landed class, iden
TTC Te With land| Letlants: While 3:1W Cool | Tits, Lip ti II re in of easily ac|| iterate Eind the
ds. Ac Was Illo doubt liece of legislation. |ST (JW.510 WT1 LHät Il lloc it is diffihe secular relations existence for genesås between the dole hand (la Tld lords. the dollilated ints, la Indless, etc.).
Wi || The new Liribunals be able LU give Illore relief to Lluc tema INES"? This is a legal institution whose decision remains final and could not be questioned in a court of law except on a point of la W at the Suprenile Court. Its dutics. El relimited only to those dealing. With land problems, unlike the ordin: Ty law courts a Tid therefore it may be it ble to dispose of disputes with much speed. However, the tenants position in the village has charged very little, if it has a tall, it is for the worse especially under the impact of the green revolution and the increasing congestion of the Liral areas. Evictions in fact have been on the increase during recent tirlith,
The new tribunal consisting of 8 members, will be headed by a legal officer. The nature of its composition Wii || deteTiThinc to What extent i E will sympathise With the tenants. This alone is of course not adequate The newly för Imel CLlLivotion Committee and Agricultural Productivity Committee, Will have to take El Timore sympathetic: EL Eiti ELi de for the tenant and extend support bili 1 lorally and legally for thin Elioi 153 alWed al Clice IC survive.
Paddy Production in 1974
Statistics released by the Departnel LoF Census and Silistics inidicate a sharp rise in paddy production in 1974 compared to the preceding year. Paddy output increased by about 22 per cent frOTT) 2.90 million bushes in 97 to 76.80 million ԷյլIsllԷls in 1974,
This increase was achieved mainly owing to an increase in the are cultivated. The area under paddy cultivation in 1974 (met eXtent ha rWested) increased by as much as 19 pe celt olycir the 1973 cxtcnt. The increment in the met exLentharvested Was partly due to a lower incidence of crop failure during the year; only 3,85 per cent of the SOWIl a Fe. Was To L har westel during the yell T. The increment in yield per acre III 1974 was relatively small-only 1.08 bushels per acre or 2.42 per cent over hill of 1973. The extents LInder improved YElrieties have increased in all districts for which data are available.
ECONOMI I FREVIEW". TA '"' || FF TE

Page 27
FEATUREs
Appropriate Technolo and Over-Developme
D. L. O. Mendis
Foreign experts, the "new Hissionaries' in the dence era were advocating high technology and car industries in the fifties and sixties. Now, with a . in the assumptions from which the missionaries is arising from strategic shifts in the World geo-polit -there has been an en phasis on so-called "inter SCCCCHCCHCCCGGGLLLLS LLLLLLLCClGGGTTS S LTT TGHL HGLGLGL HL LGGLCCL see technological develope II in both the develop the laider-developed Third World front the latter's D.I.O. Mendis one of the most prolific advocates of independence is a Senior official in the Planning Minis
The modern World has polarized into two distinct areas cuphamistically called the developed and the less-developed or dcycloping. The areas are defined internationallydeveloped countries and less developed countries - or intra-nationallymodern sectors and traditional Sectors usually in the so-called developing countries, although a similar distinction could be dra WIl WTithin some of the so-called developed COLI Intries.
The cause of this unbalanced situation has been traced to European colonial expansion in the not too distant past. Thus development and Linder-development have been described als two Sides of the Same coil, global phenomena that occurred and con til Lue to COCICLIT, simultaneously.
In the second half of the 20th
century, the developed World, after two Wars seems to Flavic established a
ECONOMIC REVIEW, MA 175
historically un inance over. Lhe The bisis of
economic, and is by a colossal consumption of resources. The cribed as One Wi richer, and the p not merely in co in absolute terns, balance of pay exchange proble ing nations.
International proliferated; E nature of equit: de jare, in slich de facto situatio
· inance by the ric
over the podrían quote only once Nations Agency lopment (UNCT ineffective in pro for primary pro

iy, Under-Development
t
post indeperital ir 7 Frisiyle trategic shift Feak-a shift
sitti riediate' airid pr is ттаde to / PKef Trif perspectiте. technological ''.
precedented domrest of humanity. his doinince is easily distinguished appropriation and ' ' Ila LLIre's limited Situation is desTe the Tich bcCCIII por become poorer. 11 parison but often as seen in mounting ments and foreign ns of the develop
gencies have also Lt Whatever the ble representation огganisations, The is one of doll1 and the powerful
the Weak. Thus, to sample the United or Trade 3d TObjeyeAD) has been quite noting better prices iucts produced in
the developing countries or reducing the inflationary tendencies for prices of manufactured goods exported from the developed countries.
Meanwhile, many representative international and other organisations have been undertaking studies of these global problems with a view to finding practical and equitable solutions. One of the concepts that has arisen as a result of such studies is described as the Transfer of Technology. Briefly, this expression describes the process whereby the experience of rapid development has been analysed to isolate a factor called Technology, and the mechanics of processes for introducing this factor into the less-developed World are SLLIdied.
After a period of preliminary enthusiasm, it was found that the differences between the developed and the developing, the so-called dominant and the dependant part
ners in the process of transfer of
technology, were aggravated rather than alleviated, in most cases, by the transfer of technology. This discowery, predictably, led to even more research into the mechanics of the process, to find out why a presumably well-intentioned, well-thoughtout (planned ?) process could fail to be the expected palacca.
In due course, a newer and (of course) more hopeful concept arrived. This was an analysis of the nature of technology, and in differents contexts Willis variously described. The expression Intermediate Technology aptly described a technological via redia between the
27

Page 28
rich technology of the developed world and the poor technology of the developing World. Likewise the phrase adaptive technology was used to highlight the flexible, non-rigid nature of a technology that, although conceived in the Womb of industrial society could be suckled and nurtured in the traditional. Again, the term innovative technology recognized the creative ability of technologists in the developing world; and finally the most recent expression Appropriate Technology was coined to describe the ultimate technological cha Imeleon — high brow or low brow as required to suit the given factor proportions (to use familiar jargon).
What is most significant about all this, however, is that the (technological) prescription is a Cure for the state of under-development of the less developed countries. The objective is to bring them closer to the state of development of the advanced countries, this by assumption, being a desired state. Indeed the (undesired) state of under-development has been vividly described as the Wicious Circle of Underdevelopment. (See Fig. 1). This model depicts the process of production at What is virtually subsistence level, according
to classical econ
III cole results in
IIleans that ther available for De quently, there is and incomics Te
the cycle is coln the original поd the developed W. only a Forced-say bet Ween LoW IS Capital Formatic Aid Breakthrou Capital for De Technological Br here was added
was first publishe emphasise that so low production with limited (m. indigenous techn to develop withol dominant foreign
also stressed that savings Breakth Foreign-aid Break relatively innocuo nological Breakth
Tılecekild of cise that produces almost always developed World the mission of especially set Lup
FIGURE I.
Loy Production
Little Capital of Declaim in
Liga Ingine
s
La yş CH
Foreign Aid Breakthro L-IE hi
The Vicious Circle of Underdevelopm
 

mic theory : Low low Savings which is Little Capital elopment. ConseLow Production therefo Te loW and ete. Significantly, was drawn up in rld, and proposed ngs Breakthrough, avings and Low in and a Foreignh before Little Pelopment. TH akthrough shown When this model i in Sri Lanka, to mething more than ould be obtained netary) capital if logy was allowed t suppression by a technology. It Was both the Forcedrough and the through would be Llis Without a Tech1rough,
economieLTic exerthis type of model, Originates in the tself and is indeed many institutions
for the purpose.
Law intings
i El Farrtation
t
Not surprisingly, the Illethod or pastine is soon introduced to socalled developed centres in the developing countries, and exchanges of ideas and earnest discussions then Lakc place across international borders on various facets of the subject of development. A new species of “International Social Scientists nov exists who participates in the stimulating game of niceting from time to time in different parts of the world Lo share the latest Wiews and news on the development effort. Appropriate Technology is one of the currently popular topics for discussion at such meetings ind seminars.
In recent times, however, the increase in the price of one of nature's most valuable non-renewable resources, oil, has introduced a new urgency to such deliberations. It has also brought a new dimension into the previously hopelessly unbalanced dominant-dependant relationship between the developed and the developing parts of the World.
At the same time, a growing awareness is seen in the Illinds of sole of the more concerned people in the developed World itself, of certain problems of the natural environment. These ecological problems are the direct result of disturbing the balance with nature by extracting its resources too intensively, and violently, and thereby not permitting natural forces to re-establish the required equilibrium.
A rising from these two not unrelated circumstances, a closer look at the developed world and its technologies is warranted. Such a scrutiny has resulted in the developIllent of a new model, described as the Wicious Spirals of Over-developTinent (Shown in Fig.2). This model shows that the situation prevailing in many areas of the so-called developed World is far more urgent and dangerous than that in many areas of the developing world. This could be described as the problem of unbalanced development or euphemistically, over-develop111EI1Լ.
The over-developed system can be represented by twin spirals representi Eng broadly production and consumption, respectively. The common front is High Productivity closely linked with High Pressure
ECCAN CHIC REWIEW", "MAY" | 75

Page 29
Tigatian and Fine-1 PROBLEMS
Fyrhia Erit and Psychological FPBLES
F.
Hi
Azzi 7 صبر
His fronts
N 2つ
|
High Prair Salismanship
CON5L
Hih Coriumption
PFCLE15. In R race
Salesmanship. In the production spiral, High Pressure Salesmanship produces High Profits, and High Profits means High Capital Accumulation. With plenty of capital the tendency is to use High Cost Technology which gives High Productivity, and so the cycle is complete. On the consumption side, High Pressure Salesmanship results in High Consumption which gives rise to a high degree of Waste which in turn means a High Exploitation of Natural Resources. Unfortunately most of these resources are non-renewable, the outstanding example being oil. Each of these cycles is in effect a spiral because inevitably there is an accompanying inflation.
Every single feature of the twin spirals of the over-developed econonly gives rise to one or more specific problems. High capital formation is at the root of problems of Monopoly and Oligopoly, MultiNationals and Cartels. High cost technology gives rise to various problems of employment and leisure. High exploitation of nature's precious resources by the use of high technology results in ecological problems. High pressure salesmanship and high consumption are responsible for many of the psychiatric and psychological problems, and all the social problems of the rat-race.
ECON CHIEVIEW - 7
N
The Vicious Spil
All these are ideological prob Liltimatc solutio1 gical as well as mel. HOWeWer their colosSal si global, and the is therefore of If a fraction and (other Tesol studying the na technology for t Lics, is transfe to a study of priate technolo vicious spirals c in the develop solutions will st early - and th safer and health ing and develop
What would of such appropr the developed W must be in i II and dramatic in paid for primar oping countries. restrain the pri. tion of scarce To reduce high Waste there mu of High Pressur achieve this ol there must be to reduce the heads and est
 

URE 2.
Capital mulation
CTION
High Frautirit
<=
HTICH
K\
FRODLEMS. of Capital
Monopol and Oligopoly Multinationals and Cartel
High Cost Technolo
PROBLEMS of Employment and Leisure
Ezalogie al PROELEFS and PROBLEMs of the Environment
High Exploitation of Nature's Resources
i Eh WazLr تحصے
த் LLLLKLLLKKK LL LLLKML LLLLLLLLSLLLLCLLLHH LLLLLLS
"als of Overdevelopment
materialistic, nonlems, although their 1 Inay require ideolomaterialistic treat| by the mere fact of cale their impact is Ileed TOT Solutions the utmost urgency. if the time, energy ITCCS nOW Spent con ture of appropriate he developing counTred in good faith, he requisite approties to reverse the f over development ed contries, Such Irely be found very World Will be a er place for develop
d countries alike.
the characteristics atic technologies for prld Firstly there mediate substantial crease in the prices products of develThis will be to sent high exploitaIn alt L1 rall Tesources. consumption and it be an easing off Salesmanship. To jective in practice a deliberate effort quantum of Overlish shorter links
between producers and consumers. Whether this can be achieved without centralised planning, at least in different sectors of the economy, is questionable. Centralised planning of the indicative type practised in France where the major producers are called in as advisers to the central planning authority may be possible in the United States where the constitution permits business interests to lobby their points of view on political issues. A similar lobby system may be institutionalised to assist a central planning authority.
However, these are mere speculations far removed from the Illonstrous reality which is the gross distortion of the production process that we have labelled over-development. The immediate good that can Tesult from a discussion Cof the Ineed for appropriate technology in the developed World will be to restrain the over-enthusiastic efforts to "transfer technology" to the developing nations on account of the realisation that such a cure is patently worse than any disease of underdevelopment. Furthermore, the aggravation of Linder-development by continued extraction of resources from the poor countries in the form of primary production will be checked, if the insatiable hunger of the high-technology production machine of the developed world can be curbed.
9

Page 30
V
Population and C.
Relle | IIIlIII
oIIrt Iiri lifeti réir i Iliriceoir.
LCCCCLTGLGGCL CCLYLLHHL HK LSL T LLS CGCCaaCaCaLSLS LHCCTCCHLHTT S SLT L LLL TCGG L TT LTS S CCCTGCTL
There has heел Iїугіе егід/ir. LL TCT HT L L L S L HH LLLLLS LLL LTT L SL T LHHL S LLLLLS YLGGLLL TSLL LGGL TS KHLS LSLTCCmCHuTL TT LLLL S HLCLS LLLLLLL LCaL LLYa SLLLTTT LL LL L LLLSL TGGL S SLLLL LYLLLLCS LLLLTT SLLLLa LCTCT HHH LLL LLLLLL GGGSLL LLLLGLLS OLlaLaLS LGLaGCHCL TLLS TT TLTuTTTTLLLLS LL LLLLLL HLLS Y aLLLLL LLGLGLL LLL LLL LLLLLL GGLL LLY CLLLLLLL T LLL LL LSa LCCmGLuLLuHSL H HCCCGGGaGGTLLS LLLLCLLTS TLT LL L LLLLL LLLLLL LLL L LSLS LSGHCHHHHLC CCCLrLLmHm TL GTHL TTSL HLHCCmLHT CHuYSL LS s' pathetic to the Third World.
El 1950), Sri La Lika (then callel Ceylon) asked the United Nations Lt KLLLLL LH S aLLLLLS aaLLLLLLaL SSqqSqS something which lo other State hild even die besejre. This lissist: lice for research (111 ind popularization of birth control was refused by the United Nations. Too many nations refused to take a position which would permit such an action. Which nations The Catholic nations, on the one hal Tcl, and the conly 11 LI This L. Inations, On the other. Only in 1966 did the United Nations finally agre-eight years lgo. 16 y el Ts too Fate. Now, more Eind more. We realize that the situation is very LaaaL S LLLLL LLLLL LL LLLLL LLLS LLLLLLLHaS thing.
Wilt, I cut is this sit Latin " In the 19th century, IT the poբլյlation increased in Europe and in the United States, it did so I lostly. With the help of increased agricultural as well as industrial prodLuctio II. BLI I today, in developing countries population growth is not linked to a sufficiently intensified production, but mostly to the progress of mediCine and the Ted Luction cif doith Tille. Ill followed (as was the Clse in developed countries) by a reduction birth rate. Eye if we II it ourselves to looking at the problel
Հ[];
from the standpoi Si Lilitic T1 is becil
FigliL years Itg:)- entitled in Englis Future (A. Det 1969). Today, We that We are going We are in a huge is spreading. It c and Ethiopia. It is The cel Eric Cif. Jy |[ cğlılığat be ch[5] Yes, the TE WE5 a India and in Bangl; it is Warseiling day has been hunger i years, then it his tha II Ility,
Why First, th gical reasons. The is the consequence destruction by to of population an is : blow lill dLIC LO) growth of export ci Luts. Il la W, presently used agt is incapable of s live-stock, yery mai T ITEl Ely CFCFS.
The di TIli ili I III el Pakistan is eq

annibals
fel sergel
η ιται μί I lis JII (JTri s
CEF, MEN WEIHT, "re of the HET"ויון וזניtי " .N. jEy Iris Jr. Ferre
int of food, the gtr Lily dramatic.
I WTO të El book. h "The Hungry Esche. London, in no longer say
towards hunger. risiti LilLil Willi:
ist. Il Lill: Sill:| rampant in India,
ind Bangladesh, dured accidental. lways hunger in aclesh, Hut clearly
by day. If there 1 Bangladesh fict" cer ligen y Tse
trւ էլrt Լիe et tiltSahelian fillie OF en wir OIIITiënt: 1 rapid an increase live-stick. It The Li Titless ops, like groundhich, given the iculturall syster 11, upporting many y People : Tid to
India, Bangladesh. Lally ecological :
aa aaLaaaLLLLLLLaaaaaL LaLLLLLLLa aaLLLLLL S LLLLS Hii hall:hy:: Il slopics, Tricq LLC:n E im Indi: Lill lore se in Nepal, has led to Lhe ilçceleri Lecl dalıntıge of Sol Cr3SiCJI 1 : Inkl IC3 ggrał w: icul file:Cds
a S LLtaaKS tLaLLLLS aLLS aaaS LLLa Elrushing waters are no longer there. So each year the floods become Il care serio Luis : 1970 — 1 big fler Cid in Bangladesh —big fleiðeicls i Il Pilkista II ; 1974 - the biggest floodi cwcir scien in Barugladesh, bigger still than the 1955 one. Wind in the intervening years, the population had grown bigger.
This then, in brief. Is the sittition Whill 3.5 L,
Firstly, in illi | he history of the World, the population his III: VICE increased als it is now. dring und 45 quickly as it is now loing.
Secondly, food production is not keeping Place beta Lise, il tı veT populated lands, the available lar. has already diminished by half since the begin II ing of the century
T. L. his Coltree, it is aaLLLLLLLL LLLL La aaLLLLLLL LL LLLLLLLKK (5,5 billio II in habitants by the year 2000. It is hoped that the World population can be stabilized at between 11 and 14 hillion by the Tiddle of the next century. personilly do not believe that We shall ever il Trive Ett tilles: figures because if we cwell approached ther, LLLH LLLLLL aLLaLaLaaLLLL LLtHLLaa LLLLLa00S
aaaLaLaLLLL S SLLSS SLLLLL LaaLaaaaa aamLLS pictely inadequate since its Plan of Action provides for aid to States to Tetlլյut the Իirլի THԼւ: Էյլ է Ictivէ: complete freedom to do so, first, to each couple, and then, to each State. I believe that we should g. wery much further Illan thlt.
Pilderers of Third World
But his would met First Elking into consideration that the squad:
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Page 31
of the planet's rare resources - energy like oil, coal and LIranium. or metals, like copper, zinc, lead and tin – is primarily the Faul of the rich countries. Barbara Ward and Rene Dubos showed LIS in "Only One EHIth' (W. W. Norton & Company, Inc. New York, 1972) that the Indian peasant of Bihar consulles 500 titles less energy and LGLaLLaL S S LLLL a LLLLLaLaaLLLLSS S LELLS York SLIM Lurbani Le: The Comference should have first condemned (but its Plan of Action does mot do sco) 5ion in [he righוןdיןאטnנll|[tPtililLit: JOLITIFies – NOTIh Americ:. Ell of Europe, Japan and Australia. We ill List not forget that the rich coultries are the plunderers of the Third World. They are the ones who "under-pay for the rare raw mateTituls of the Third World and then si quander them.
The next step should be to arrive Li more rapid reduction of population in already over-populated countries. But demographers - and first among them, those of the United Nations - War Is that a considerable inertia exists in deilogrly. It Is Wery dificuLo reluce population growth more quickly, and arrive in the shortest possible time at zero population growth (ZPG). But this will soon be imperaILIWE.
In so far as I am an agronomist, I Think that It is Even mere difficL1lt Lo increasc agriculturhl production more rapidly - especially, food production. This is evident from looking a L the population and food production curves of the Third World. From 1959 to 1969, they moved in a parallel direction. But since 1969, in these countries we call developing, the speed of population growth has risen Ilore than that of food production, For the past five years, in fact, there has been a per capita decrea se in viable food which naturally asstilles a scale of exceptional gravity in the famineHi[ZOIles.
If We Colbille the EWG illertias: the demographic inertia (it is iiiipossible to reduce the population rapidly) and the agricultural inertial (it is impossible to increase food availability rapidly), in comparing the cres, we arrive at El THITEllic
ECO NE MI CREW NEW, MA, " - 5
multiplicatic.Il col surface of the glo the next 10 or 20y
Relucing Ene Illi
III Cortier EC : tiibviously speedili EGIN ELInd birth gC) Ole 5oluLill: ineqlal litics al ceasing to diwi Tes OLITCes als We cl of nonetary re. Li L1e li W of t sta ringto civile the real needs (i. of each country. the rich colli reduce their cons as well as clergy We should ail elimina ting prival them by public Toleil. Ils abûye al ut an er d L foi of the S:llen si:
s Hl: WT:COLLIT
Last year, the OLIntries sul if cereals all ca. a fraction of his TIL TITT F III Wys Llefilless Esci the tast: tյf metit t S:lIlle 385 Ilillio. W Lil Wici feld i silcic they consu cercials directly part after transfor products.
How can we gi red LCt their corl. How can We put: facture of privat the csscIntial pri Calc da Ted to Get ference.
Eating Little Chil
I hawe al Teatly show that the Tic his over-constill his lack of gener populations acts.l. ilbciE Indirect. I consuming meat Ceres y Which1 : them, we are the Sahel, of Ethiopij desh. And this

fillines of the be in the titյլIrst (if
*ITS,
til,
void this, besides g up food producintrol, there is only La Tcd Llice Social world scale by He the planetary lW, the bisis ources, according e Imarket, and by hem On the basis of ot financial needs) Thilt leans that es should greatly umption of metals That I means hält El t progressively Ic cars and replace transport. That I thit we should di Wäiste. And onlle Lics of food Waste ption of meat.
lliwic-stock ir 1, Tich cd 385 million tons title oil-cake. Only
eille Lisable in lk ind meit, the g much greater in El of Immik, These in Lons of cereals wo billion Asians, Ille most of their and only a small mation into animal
et rich COLHIltries. [[C) jumption of meat" i stop to the manucars. Here are oblems which no
forth at the Con
dren
" hadi occasion to h white Iman, with tion of Theat and sity towards poor ike a L T Lle canibal, last year, in overwhich Wasted the 0 Luld hawe sällWicid little children if the a and of BanglaWear, We Tre COT1=
tinuing to do the same thing, with the same appetite.
We gave 600,000 tons of grain last year to save the starving of the Sihel. This Wis; 4)), COCH) this less Tham were meeded. DIle [] thal, and also due to the insoliciance of local governments, at least 100,000 people died of hulinger in the Sahel. This is Why I told the Conference that white men, rich White millen, were cannibals.
In the past, Christianity and Islam decreed that a tenth of one's income had to go to the poor and yet the rich of Gospel times possessed very much less than we deo. But we, who enjoy a prosperity never before attained in the history of the world, generously consented to give only (), 15 per cent of our resoլrees to the starving of 1973. This is a disgrace F}T. ( )LuT Tir11e:S.
I still do not have all the reports, but it seems to Inc. that although sole voices were raised on this point, the "official" Conference of Bucharest refused to consider these problems of distribution. It only spoke in too vague terms of a new economic order,
There are those who rightly declared that the population curve should not be our only preoccupation and that we should give priority to that of development. These countries were led by Algeria and Argentina, but though I agree that we must first deal with development, do not agree. When Argentina claims that only development matters and that we must put aside demographic questions.
I know only too well that there are depopulated or insufficiently populated parts of the world. This is often the case in Africal and SOLI thi America. But even there. We must take into account the speed of population growth. If it is too rapid (and it is now), if agricultural production does not keep pace, it will create an increasing dependency situation for these countries 'f-i- is countries Which hal We the Cereal reserves. This is a problem which certain oil-producing countries like Algeria should face up to. They are tempted to neglect their agriculture because, with their oil, they can
3.

Page 32
"THE կցի է 'arri Ifries (3 Τήές μιμιλιατί siccarried f of foral
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today buy cereals from other countries. What will happen when their Wells run dry For some of them, this Will happen in 20 years.
The World Food Conference, which was held in Rome in Nowellber last year can be considered as the
i paralel of this Conference on popullation. We can read in the FAO preparatory document that if the present evolution is maintained,
countries of the Third World Will
have to import 85 million tons a year of cereal by 1985. At $200 a ton, if the present price does not increase, that will represent $17 billion. The Third World will never häwe the means to pay that. They will again hawe to bort Towy — and this to increase their dependence.
It is because of this ever-growing indebtedness that again I recommend, as I already did in my book, "Utopia or Death" (L'Utopie ou la mort Paris, Editions Le Seuil, 1973) that these countries decide, for example, on January 1st of next year, to unilaterally repudiate their debts. They should say to the rich countries : "You have robbed us by paying less for our raw materials than they were Worth and
by profiteering when you sold us
Ilanllfactured go a Tc Illot Tical dcb represent the an have still from
In the face Of 5) developed, capital Tich. COLI El tries — take retaliatory : each country of should organize its
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findes fly for lysskr. frr:TI frl Frié || terry.
The can Len Li of Economic Frtietarisy be quite
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lch a position, the ist countries – the would inevitably measures. Thus, tle Third World self, as the Chinese
say, in order to be self-reliant, to ensure themselves of their development essentials, in order to become more and more independent as far as food goes, for I believe that food independence is closely linked to the speed of population increase.
Accomplices of Dependence
Today, the lack of caution about population and the lack of sufficient efforts in agricultural production are the accomplices of dependence. Like my friend, Pierre George, the geographer and delegate to this Conference, I consider the population explosion to be the best ally of neo-colonialism and dominatingimperialism. In a few years, with the growing World scarcities whoever wields the strategic arm of exportable Wheat (therefore, North America) will wield an arm comparable to that of oil, and will be able to impose economic, and even political conditions on everyone else.
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