Poor and Rich

AS Americans tensely watch the negotiations that fizzle in Panmunjon and the negotiations that never get started in Saigon, 1500 delegates from 132 countries are quietly gathering in New Delhi for the conference that "will be more important to the future of the globe than Vietnam or Korea or Cuba or China," according to Undersecretary of State Eugene Rostow.

The 121 nations that say they need economic help and the 11 nations able to give it will face each other for a month of discussions at the second United Nations Council on Trade and Development (UNCTAD). The question they have to answer is whether the poor nations of the world are ever going to be able to catch up with the rich ones.

An atmosphere of urgency surrounds the conference, caused by the realization that time is running out for the undeveloped, poor countries. The rich countries know this means time is running out for them, too.

"It is absurd to think that any rich nation can survive when most of the world is starving," a Belgian diplomat said. "No one will be safe unless we build a solid middle-class of countries."

To Americans, this sounds easy enough; just let free trade take its course, and the nations will develop. Western foreign aid programs rest on this assumption: give the poor countries a start, and soon they will be able to build themselves by trade.

Taiwan was the showcase for this approach. After American aid provided the foundations for a steel industry and light manufacture, Taiwan competed successfully in the Asian market and became, in the late fifties, the first country made economically independent by foreign aid. Following this initial triumph the program was widely applied in other underdeveloped countries.

BUT the chilling realization facing the diplomats at the conference is that free trade hasn't worked. In the last ten years, the gap between the rich countries and the poor has been growing. And unless change comes soon, the outlook for the future is even worse.

In 1966 each citizen of a "rich" country--the United States, Russia, Canada, Australia, Japan, and the developed Western European countries--was supported by about twenty times as much industrial and agricultural wealth as his counter-part in a poor country in Asia, Africa, or Latin America. More frightening, by the year 2000 the ratio will be about 50:1.

This widening gap doesn't just mean the developing nations are getting rich more slowly than the industrial nations. For many Asian countries the next 30 years will actually bring a lower per capita income and standard of living as birth rates outstrip economic growth.

The core of the problem is a disastrous balance of trade: the poor countries are getting lower and lower prices for the raw materials they sell to the industrial powers, while the developed nations are steadily increasing the prices of the manufactured goods they export.

An unfavorable balance of trade can make any country clamp down on expansion. But for Senegal or Malaysia or Iran, trade is doubly important. Since the poor countries have little internal capital to finance development, they depend on foreign trade for money they need for expansion.

IN 1964, the United Nations made the first attempt to reverse the deadly trend by holding the first UNCTAD conference in Geneva. Diplomats from the industrial countries hoped the minor revisions in the existing trade system that conference produced would be enough to at least relieve the problem.

But their inadequacy has become painfully obvious. Since 1964 the poor nations' balance of payments deficit has jumped from $10 billion to $40 billion. Now the poor nations are looking for an entirely new system of trade.

They will probably seek four major changes:

* A system of "preference" trade treaties. By agreeing to temporary, non-reciprocal contracts to buy manufactured goods from developing nations, the developed countries could stimulate industrial development in the poor countries.

* The removal of those rich-country protective barriers which lower the prices of the poor-country raw-material exports.

* An increase in foreign aid programs.

* The formation of common market trading units among developing countries.

To the United States, fighting to improve its own balance of payments by cutting back on imports on foreign aid, many of these demands will come hard. But there are a few encouraging signs. Before he left, Rostow--the American representative in New Delhi--announced a major change in American policy. After ten years of firm opposition, the U.S. will be willing to accept a system of preference treaties at the conference.

But, there will be conditions attached. The most important will be that Britain and France give up their system of "reciprocal preferences" with their former colonies.

Other demands seem certain to hit snags. Congress has cut foreign aid and has shown little inclination to lower trade barriers. And the abortive attempt to form a Latin American common market offers little encouragement on the score of cooperation among the poor nations.

On the whole the conference's prospects appear dubious. Unfortunately, a quiet failure in New Delhi may be more crucial in the long run than success in Saigon or Panmunjon.