Demagoguery in the United Nations: The New International Economic Order, 1973–75

The US Secretary of State, Henry Kissinger, debated an essential question of the international political economy with Algerian President Houari Boumediène at the People’s Palace of Algiers in April 1974.  In the wake of the four-fold increase in oil prices from October 1973 to January 1974, Algerian President Houari Boumediène told Le Monde that the American attempt “to establish a protectorate” over the post-crisis petroleum order necessitated a coherent Third World response.  The market power of the large industrialized consumers had too long kept down the prices of raw materials. 

Boumediène began the conversation by telling Kissinger that his economic ideas were “outdated.”   Kissinger responded sharply, equating American policy on prices to that of “Brezhnev on world revolution.”  The analogy is telling.  The stand against expensive raw materials was ideologically entrenched.  Kissinger could do little to lower oil prices, but he would never agree with “demagoguery” in the United Nations or “the idea of cartels.”

This paper begins with American policy to supplant the UN Emergency Relief Fund directed by Raúl Prebisch.  Sidelining the father of the doctrine of unequal exchange was part of a broader agenda to curtail his ideas, as expressed in the New International Economic Order.   The Carter administration continued that policy.  “Stabilization,” promoted by the State and Treasury Departments, called for a “vastly increased” role for commercial banks in the ownership of sovereign debt and the greater use of commodity bonds and other forms of “insurance” against default. 

American diplomacy assumed a relationship between national sovereignty and the international economy that stood in sharp contrast to that of Boumediène.  “Sovereign debt” became a common invocation in discussions about the international economy by the end of 1975.