Treasury Secretary Donald T. Regan warned western finance and foreign ministers today that further difficulties could complicate the Third World debt problem.
Regan said at the start of a two-day meeting of the Organization of Economic Cooperation and Development that, "Looking ahead, more reschedulings, including additional countries or potential 'second round' difficulties . . . cannot be ruled out."
He cited this worrisome prospect to support a five-point strategy he proposed to allow Third World nations to service their debts and to maintain their essential imports. The key new element among Regan's five points would be the willingness of governments and their central banks to provide "immediate and sufficient" additional cash to those countries running short, until they can "negotiate adjustment programs" with the International Monetary Fund. He gave no further details.
Regan's reference to "second-round difficulties" was an allusion to the recent disclosure that, within weeks after having agreed to terms of an IMF loan, Chile cannot meet the conditions established for the loan, and is likely to need further help or an easing of terms. Other heavily indebted Latin American countries may encounter similar problems.
Meanwhile, Secretary of State George P. Shultz presented a conciliatory statement to the ministerial session on the problems of East-West trade, assuring anxious Europeans, who wish to preserve normal trading relations with the Soviet Union and the Eastern bloc, that the United States is not seeking to push them into economic warfare.
Rather, the United States believes that trade with the East must be based "on sound economic principles so as not to jeopardize either the security or the prosperity of the democratic nations," said Shultz, who flew here yesterday.
Shultz' low-key approach was a variation of the standard U.S. warning against trade with the Soviet bloc, this time arguing that it had nothing much worth trading for.
Shultz, Regan and most of their counterparts who addressed the session strongly supported the initiative taken by OECD Secretary General Emile Van Lennep--who accepted today a continuance of his job until Sept. 30, 1984--to encourage a rollback of protectionist devices as the hoped-for, although modest, world economic recovery gains momentum.
Not all agree on the dimensions of the recovery, and few were as optimistic as Shultz, who said that, with an American recovery under way, "the world could be headed for a long period of sustained, noninflationary growth" if all nations keep their own houses in order.
Van Lennep said yesterday that a gradual resumption of growth is taking place within the OECD area, and that "a more satisfactory rate of around 3 percent" would be reached by 1984.
Everyone agreed today not only that this figure needs to be increased, but that even modest growth won't be sustained unless antiprotectionism is converted from a mere slogan to some meaningful rollback actions, especially where that will contribute to the process of staving off disaster in the Third World.
Meanwhile, a battery of top-level U.S. officials, including Shultz, Regan, U.S. Trade Representative William Brock and Commerce Secretary Malcolm Baldrige, reiterated the theme that economic recovery has, in fact, begun, but could be frustrated without a rollback of protectionist measures.