THE GREATEST CRISIS of the remaining part of this century may well be not in the confrontation between East and West but in the confrontation between North and South. It is a confrontation waged across a huge and widening gap of hunger, bankruptcy and despair -- and one that inevitably leads to hostility, frustration and, ultimately, violence.

Of all the causes of this confrontation, the most immediae and most dangerous concerns the price and supply of oil. Paying for oil at rapidly rising prices is driving the nations of the Third World toward a massive economic problem, and their rapidly rising debts now threaten the whole international financial system. And, as we all know, when economics gets important enough, it becomes passionately political.

Some figures are instructive. The debt of the non-OPEC developing countries was approximately $250 billion at the end of 1979. Conservative estimates are that it could rise, by 1985, to an astonishing $650 billion, albeit in inflated dollars.

What that means, among other things, is that by 1985 about one-third of all income -- on the average -- of these desperately poor lands from exports would have to go to service that debt. If one-third of your gross income went to service your earlier loans, you would be broke, -- and,and equally as important to the financial structure, so would your creditors. Western commericial banks, for example, have been the source of about 55 percent of this rapidly pyramiding debt.

It is widely and wisely said that some developing countries will have to make "adjustments" in their economies -- which can easily be a euphremism for a further cut in their already low standard of living; that is, by reducing their imports significantly. But we are all in this together -- the rich countries as well as the poor. For developing country imports are increasingly developed country exports. In the case of the United States, we now export more to the oil-importing developing countries than to the European Community. In the case of developed countries generally, virtually all of the growth in manufactured exports since 1974 is explained by the growth of exports to developing countries.

By contrast, when one looks at the oil-exporting countries -- the members of OPEC -- one sees an extraordinary balance of payments surplus ($50 billion in 1979 and a projected $120 billion this year!). For easy but perhaps painful reference, the total value of all common and preferred stocks in the New York Stock Exchange at the end of February 1980 was about $1 trillion. Conversely, the oil-importing developing nations will run a combined deficit just this year of between $60 to $70 billion, zooming up from about $40 billion last year. (To put that one-year figure in its ominous perspective, it represents nearly a quarter of their 1979 imports and approximately 5 percent of their entire GNP.)

If oil prices rise somewhat further, or even stay at present levels in real terms, the OPEC surplus would continue to cumulate relentlessly at over $120 billion a year -- $10 billion a month -- for the next several years. Developing country deficits would then relentlessly be transformed into rapidly cumulating debts. Thus, the transfer of resources is not only unprecedented but has come so suddenly as to make necessary either unparalleled adjustments in reduced standard of living on the one hand, or, on the other, in productive, long-term investments -- or, of course, in both.

The oil-exporting countries have yet to become -- , or, truth to tell, have yet to be asked in a coherent and sustained way to become -- a significant part of the solution to the immense, agonizing problem in the undeveloped world, where nearly a billion people live in what the World Bank calls "absolute poverty." The skyrocketing prices of oil, the mushrooming debt of the poor countries in order to pay those prices and the increasing share of their income those poor countries must pay in order to service that debt -- all of that has clearly made the oil-exporting countries an important part of the problem. Indeed, some would even argue they are the problem, and I would argue there can be no solution without them.

Furthermore, the very burdens with respect to debt service -- and interest rates which seem to rise as rapidly as the price of the oil to pay for which the money is being borrowed -- suggest increasingly that many private banks will decide no longer to advance loans, at least to some countries, in the amounts required. There are better investments elsewhere, and the many borrower countries are becoming simply too far extended to make them any longer a sounde commercial risk -- particularly given the absence of any sense of security about our oil future, either as to the price of the oil or the price of the money.

Some unworried analysts have said that with a little belt-tightening and drawing on reserves, developing countries can get through this year without crisis. But if the 1980 projected deficit continues year in, year out in 1981, 1982, 1983. . . then no banker can find cheer in the news that we might just squeak by this year. In addition, even those commercial lenders who might wish to continue financing oil-related debts by the developing countries may find themseles up against severe practical restrictions, whether in the form of the banks' declining capital-asset ratios, country lending limits, basic creditworthiness and the like. We may, I believe, no longer rely on the commercial banks to assume the burdens and the risks of a significant share of this debt.

So, if the governments of the United States and the other industrialized countries can't do it, if the international lending institutions don't do it, the result could be such economic chaos as to be -- in a word much in vogue -- "unthinkable." But we must think about it, if only because the alternatives are truly unthinkable, and because there remains, it seems to me, one broad line of attack which has yet to be tried, at least seriously.

What is urgently needed is the convening of an international conference to work out a true international "concordat" in which the three groups participating would be the developed countries, the oil-importing countries and -- the new key player - the oil-exporting countries. One hopes that the latter would find it hard to refuse at least an invitation to sit down and talk about how to ease the burden of oil purchases which now fall so heavily on the southern countries, the poor countries, most of them nonwhite. I think it might be difficult for the chief oil exporters to turn down such an invitation because, without exception, they call themselves friends -- indeed, brothers -- of the developing world. In fact, OPEC countries count themselves as members of the nonaligned nations, as southerners in the North-South conflicts.

Now, the relative inactivity of the oil exporters on behalf of their beleaguered brothers to help alleviate the financial misery in the Third World to which they have certainly contributed -- this anomaly has not gone unnoticed. To be sure, some oil-exporting countries have certainly begun significant efforts in this direction by increasing their direct foreign aid to the poor nations. In the aggregate, however, these relatively small amounts given by individual oil-exporting countries are of little help in a situation debt rises 10 to 20 times faster than this increase in aid.

If such meeting were to be convened, culminating in a summit conference, the agenda should be a relatively simple one: not another "global agenda," please. If possible -- and it certainly won't be easy -- it should be focused on the related issues of oil prices, demand and supply, and how the oil-exporting countries and the industrialized consumers can help to ease the financial burden on the oil-importing developing countries caused by the increasing cost of petroleum.

The oil-exporting developing countries should be encouraged to join in at least the following efforts, forming a part of what the Brandt Commission calls the 1980-85 "emergency program":

1. Substantially increased direct budget-support aid -- grants, almost certainly -- to the poorest countries, in which the industrialized countries would also agree to participate. The precise shares of such contributions, the recipients and qualification standards, would remain a matter for negotiation:

2. direct lending to middle-income oil-consuming developing countries.

3. The lending "consortia" would also jointly share loan guarantees to the oil importing developing countries. This could be done through much expanded resources at multilateral institutions (such as the World Bank or the International Monetary Fund) and/or, a separate fund in which the developed countries and the oil-exporting countries would contribute.

On the subject of energy and oil, as part of this "concordat," a package involving the following elements would be negotiated for this 1980-1985 period:

1. Increase security of supply: Oil-exporting countries would assure levels of production and agree not to reduce production arbitrarily or suddenly unless circumstances were truly beyond their control. Special arrangements would assure that the poorer developing countries would receive the amounts of oil they need.

2. More predictable and gradual price increases in real terms: These could be indexed to acceptable international measures of inflation. In the past, we have not accepted the idea of indexing in international trade, least of all in petroleum. But today's economy, domestic and international, is in such a state of shock and crisis that the need for some measure of stability and predictability now warrants in my view, the most serious consideration of this concept.

Furthermore, I was taught at the University of Chicago that if one has no alternative, one has no problem. The blunt fact is that over the next five years we do not have any other alternative for significant increased oil supply. Nor, for that matter, have we any other prospect for significant increases in supply from other energy alternatives. Even with vigorous domestic oil exploration development programs, we will be lucky to keep U.S. oil production even at its current level.

3. More stringent conservation: If these two other elements were coupled with rigorous agreements with respect to conservation, by both developed and developing societies, the oil-exporting countries would clearly be more inclined to go along.

4. Major investments in energy exploration and development in developing countries: There are benefits here for everyone. For a variety of reasons, of which the key point is almost always some variant of political instability and risk, the drilling ratios in the United States as against the developing nations have been estimated to be an astonishing 140 to 1. In other words, where the geological and other analyses are equally favorable, it has been estimated there are about 140 times more wells drilled in this country than in developing countries.

And, globally -- and those are the terms in which we must think -- a barrel of oil is, after all, a barrel of oil. As matter of fact, a barrel of oil produced outside a cartel is better than a barrel of oil produced by a member. For the poorer nations, it is obviously better to have oil to sell than to buy. And to the investors from the industrialized and the oil-exporting countries, the quid pro quo of sharing in the investment pool would have to be an increasing responsibility of the South -- the Third World -- in a structure and rules to encourage both exploration and production, and, to the extent possible, to protect those investments.

Both the tactical and practical questions are endless. Clearly, any summit conference would require intensive preparatory discussions among, for example, financial experts from governments, international financial institutions and the private sector.

The issue of a "transfer of power" vs. a "transfer of resources" will persist. It will not be realistic for us to want to appear to control something we don't have -- that is, oil -- when we are unwilling to share more control in what we do have -- that is, money and the related monetary institutions.

Is the basic proposition practical? No one can be sure about anything, except to say that while this "concordat" is certain to be very difficult, it might also be equally rewarding. (We don't, incidentally, have too many options that even have the opportunity of being very rewarding.)

From the standpoint of the developed countries, there should be enough here to get us to the table -- that is, if anything can during our own economic emergency.

How about the developing countries? With mutual interests come mutual responsibilities, and I would hope they come to the table in that spirit. Enough of the conventional strident and, in my view, counterproductive rhetoric of the "New International Economic Order," with its irksome asymmetry, whereby "we" are assigned the duties and "they" acquire the rights. As Jean Monnet once said to me, "We must learn to attack our problems instead of each other."

Part of that kind of attack is for developing countries to take a leadership role in supporting this conference. For example, the developing countries might take the initiative in specifying their own responsibilities. They might also play the decisive role in getting the oil-exporting countries to join this table -- and in keeping the players at the table to a manageable (i.e., small) number.

From the standpoint of the oil exporters, I'm sure this will take equal measures of persuasion, statemansship and the longer view. Would oil-exporting countries be willing to make a tight enough deal, particularly in the context of unresolved political problems, such as insufficient "progress" on the Palestinian issue? We shall have to see. And even if all that could be obtained in the absence of political concessions that we or others are not prepared to make, were a "declaration of principles" and an agreement to help the poor nonproducers, it might well be worth it as a start toward a solution.

Oil exporters are likely to want additional assurance on such things as their own post-oil economy and financial security of their assets (and, indeed, the military security of their countries), so that they would be willing to continue to sell oil at the levels we need in exchange for some other asset that maintained its value in an inflationary world and was secure from arbitrary political action by other nations.

The central point, in my view, is that we must be willing to get into a real and long overdue dialogue with oil-producing countries.

One more purely western effort by the highly industrialized nations to convene a conference in order to impress others with their responsibility to the poorer nations will simply not do. We can cooperate, we can advise and ultimately we can join with the oil exporters and the developing countries in whatever agreements emerge -- but it cannot be our conference. My southern friends on the Brandt Commission kept reminding me that in this highly ambivalent helper/helpee role,how one aids in the process is at times as important as the aid itself.

We must also make it clear to our own people -- and to our developed, industrialized, petroleum-consuming allies -- that there are no guarantees on the road to economic development and economic security. The Brandt Commission has offered not an insurance policy against failure but a tentative road map to a future which might yield some relief from the frightening spiral or price jolts, borrowing, debt, deficits -- and then more price jolts. Along the way, there may well be more Irans; some governments may fall even as their economies grow stronger. But it is an uncertain world, and we must try. The stakes are too high to do anything else.