On the assumption that the current oil glut is a temporary windfall, the communique coming out of the Ottawa economic summit on July 21 is likely to concentrate on global energy resources in several important ways.
One is obvious: the presidents and prime ministers of the assembled seven largest democracies (United States, Canada, France, Britain, Germany, Italy and Japan) doubtless will reaffirm last year's commitment to reduce their dependence on imprted oil by conservation and the expanded use of alternate energy sources.
The other is less obvious, more controversial, but no less important. It has to do with the crushing financial and economic burden of imported oil on the 100 or more "developing" (which is to say poorer) nations of the Third World.
At Venice in 1980, the seven proposed as a long-range remedy the creation of a $25 billion "energy affiliate" to the World Bank. Its loans would be for the explicit purpose of helping under-industrialzed nations reduce their dependence on imported oil by expanding domestic energy production: hydroelectric, coal, forest products, as well as oil and gas.
The Carter administration endorsed the plan. So did Robert S. McNamara last September in his final annual report as president of the World Bank. "At present prospective oil prices," he declared, many of the oil-importing developing countries could "turn what were previously regarded as marginal energy reserves . . . into profitable investments."
This would allow them to cut by more than $50 billion a prospective annual oil-import bill of about $230 billion by 1990, he argued.It also would reduce both the aggregate global demand for oil and upward pressure on prices, to the advantage of rich as well as poor oil-importing nations. And it would make it a lot easier financially for the developing countries to provide the energy that is so essential to their economic progress. Their economic expansion, in turn, would mean richer markets for the industrialized nations, and greater output of raw materials the advanced nations need.
The logic of it sounds unassailable. But the machanism -- a new World Bank affiliate -- offended the Reagan administration. For one thing, the original proposal would have required an extra U.S. contribution. This ran afoul of budget constraints.
For another, it would have meant creation of yet another multilateral government lender. That's ideologically unacceptable to influential Reagan aides who hold such institutions to be somehow promoting dread "socialism" by virtue of their lending to "socialist" governments.
So the proposed World Bank energy affiliate is likely to die a quiet death at Ottawa. But hold on: the concept of expanded World Bank lending to develop indigenous energy resources in developing countries is likely to emerge in surprisingly good shape.
There are at least two reasons to anticipate a positive attitude, not only at the summit but in the months ahead. Both have to do with developments, little noticed, that preceded but unquestionably are influencing, the Ottawa deliberations.
One was a gradual softening of the Reagan administration view, culminating in grudging acceptance of the need for expanded engery development in the Third World and a recognition that private investment (the preferred instrument of the Reagan crowd) cannot do the whole job. The word was passed that the United States would not object to having existing bank resources diverted to this purpose.
To this, the supporters of the idea said thanks but no thanks. As one World Bank authority put it: "We weren't prepared to cut back funds for agriculture, for example, which is 30 percent of our lending today, in order to produce money for energy; it's got to be in addition to what we're already doing." To which, the U.S. answer, at that point, was a firm "no."
But a subsequent development significantly increases the chances that the U.S. answer utlimately will be "yes." What happened is that the West Germans ended a prolonged controversy by withdrawing their traditional opposition to any expansion of the bank's capital reserves (and thus its lending capacity) that did not require member nations to put at least some money into the pot.
The bank's last capital expansion required each member ot pay 7.5 percent of its share in cash and guarantee the rest on demand. The new rules, requiring no cash on the line, would impose no budgetary demands on the United States.
"A tremendous breakthrough," one experts calls it, not only for expanded energy lending by the World Bank but perhaps even for future Reagan administration support for multilateral foreign aid, as well.