Trying to remake the world

Akram Belka?d, Le Monde Diplo 9/23

The 75 non-aligned countries that met in Algiers in September 1973 planned for a new economic world order; they were dealt a heavy blow by the oil crisis.

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Left to right: UN secretary-general Kurt Waldheim, Zambian president Kenneth Kaunda and Algerian president Houari Boumediene, non-aligned movement summit, Algiers, 5 September 1973

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Houari Boumediene, cigar in hand, gave a rare smile, as he chaired the closing session of the non-aligned movement’s fourth summit, in Algiers in September 1973. The event was a triumph for Algeria’s president: 75 member states attended, with 30 international organisations and freedom movements – including Yasser Arafat’s Palestine Liberation Organisation – and 11 special guests, including Austria and Sweden (see Austria: neutral for how much longer?, in this issue). Eight years earlier, progressive leaders had snubbed Boumediene after he deposed his predecessor, Ahmed Ben Bella. Now he could talk on equal terms with Cuba’s Fidel Castro and Yugoslavia’s Josip Broz Tito.

The 1973 summit was a great success in formulating ideology, and Algeria also managed to persuade member states of the need to prioritise development. Libya’s Muammar Gaddafi nearly spoiled everything with a speech strongly criticising both communism and non-aligned countries he saw as too close to the Soviet Union. This angered Castro, who pointed out that Moscow had proved a loyal ally of anti-imperialist and decolonisation movements. But the spat – which was partly a clash of egos over precedence (Gaddafi was a newcomer among ‘third world’ leaders) – did not prevent almost unanimous agreement on economic issues, including taking back control of natural resources.

Ever since the original Afro-Asian conference at Bandung in 1955, and the non-aligned movement’s first summit, in Belgrade in 1961, the non-aligned countries had continually asserted their independence from the two great power blocs, calling for peaceful coexistence between them. Their position wasn’t sharply defined, because the movement had always avoided claiming to represent a third power; this made it possible for members closer to the United States (Saudi Arabia, Sierra Leone, Singapore) to sit down with those from the socialist camp (Algeria, Cuba, India).

But in 1973 détente was in the air, and the non-aligned countries felt they had contributed to it. Galvanised by the January 1973 Paris Peace Accords, under which the US withdrew from Vietnam, they deplored the fact that negotiations between the superpowers took no account of developing countries or a fairer distribution of wealth. India’s prime minister, Indira Gandhi, expressed anger over the international division of labour and the lack of progress in multilateral trade negotiations, telling the summit that without economic liberation their freedom would be neither real nor complete.

Asserting a ‘right to development’

The Algiers summit set a new course. The non-aligned countries would henceforth demand a ‘new international economic order’ and assert a ‘right to development’. At no point was there any mention of bilateral aid. There would be no begging. Instead, the watchword was self-reliance based on industrialisation, making full use of national assets, and taking advantage of the international situation to demand the highest prices. The idea of using natural resources as a tool for transforming international relations, first outlined at the 1970 Lusaka summit, was adopted as a principle for action.

Countries like Libya and Algeria, which had recently nationalised their hydrocarbon sectors, offered to assist others that wished to do the same with their own natural resources. Nationalisation was presented as an assertion of sovereignty; the state alone would decide what compensation should be given to affected foreign enterprises. Disputes would be settled in accordance with local law, a clear rejection of international arbitration.

The concept of a new international economic order owed much to the work of the Marxist economist Samir Amin (1931-2018) and the UN Economic Commission for Latin America (ECLAC), and to contributions by the delegations of Latin American countries that had struggled to assert sovereignty over their own natural resources for nearly a century. Though Salvador Allende was absent – he sent his apologies in a message read out during the summit’s first session, which talked of ‘serious circumstances’ at home – the Chilean delegation made a substantial contribution with several proposals on managing private foreign investment and limiting the influence of transnational corporations (1).

The idea was to eliminate tax incentives, establish enterprises common to non-aligned countries, and share information gathered by an observatory set up to monitor the practices of multinationals. At the suggestion of countries such as Argentina and Indonesia, the movement was to adopt a common stance in the GATT (General Agreement on Tariffs and Trade) negotiations.

Chile’s leading role

The plan for a new international economic order had its moment of glory in May 1974, when Boumediene presented it at the UN General Assembly – where it was adopted by consensus. But this proved to be its swansong. Chile had played a leading role in the non-aligned movement in the past few years, but Allende had taken his own life after a coup organised by the US (see Chile: ‘great paths’ not taken, in this issue) and Santiago was now under military rule. Though the Chilean delegation to Algiers had championed ‘universal socialism’, the country would gradually become a testing ground for the Chicago School’s neoliberal economic policies. Such policies, introduced in the West in the late 1960s with the aim of ending Keynesianism, soon became the norm and drowned out the Algiers plan.

The October 1973 Arab-Israeli war also reduced the non-aligned movement’s momentum. In the short term it confirmed that wealth in natural resources such as oil could give countries international influence. The members of the Organisation of Arab Petroleum Exporting Countries (OAPEC), founded in 1968, unilaterally decided to raise the price of oil by 70% and cut their output by 5%; they placed an embargo on countries that supplied arms to Israel, including the US and Netherlands. OPEC (Organisation of Petroleum Exporting Countries), in which Arab countries were a majority, had to follow suit.

We all know what happened next. Western economies, already weakened by the monetary disorder caused by the US’s unilateral decision to abandon the gold standard (August 1971), plunged into recession. Meanwhile, the energy bill for developing countries that did not have their own hydrocarbons soared. Cuba’s Algiers proposal for differential tariffication of raw materials, with the poorest non-aligned countries receiving discounts, was already forgotten.

Within the non-aligned movement, it was a free-for-all, with some member states, notably in Francophone Africa, berating the oil-exporting countries for their selfishness. These countries, only recently independent, were forced to seek help from their former colonial powers – France (which already controlled many of their natural resources), the UK or the US – to stay afloat.

Capturing petrodollars

Some of the measures taken by developed countries in response to the soaring oil price helped scupper plans for a new international economic order, notably the mechanisms for capturing petrodollars. When an oil-producing country benefitted from a windfall, wealthy countries expected a large part of it to be channelled back into their economies, so that nothing impeded the free flow of capital. Governments, diplomats and international organisations such as the International Monetary Fund and World Bank saw to that.

Moreover, banks and financial institutions that held large volumes of Middle East cash were able to finance investment in the global South, through transnational enterprises or loans – provided the ‘beneficiary’ countries met the usual criteria (accepting international arbitration, creating tax incentives for investors, guaranteeing that businesses would not be nationalised etc).

Finally, rising oil prices suddenly made it worth exploiting some deposits that had until then been considered unprofitable. The supermajors offered their services and know-how all over the world. Few non-aligned countries resisted their charm offensive; most (notably Nigeria) granted them extremely one-sided contracts.

As leading figures (Tito, Boumediene) died and former socialist countries (Egypt, India, China) became market economies, the non-aligned movement went into decline. Russia’s invasion of Ukraine has made the term ‘non-aligned’ fashionable again, but refusal to take part in the conflict – and uphold sanctions against Russia – has very little to do with a vision of a world of greater solidarity, less shaped by neoliberalism.

(1) See Evgeny Morozov, ‘ITT’s spectacular rise and fall’, Le Monde diplomatique, English edition, August 2023.