SHEIKHS' OIL PUTS THE SKIDS UNDER US RESCUE PLAN
Who says that the sheikhs no longer control the oil markets? A simple decision to increase production from 2.5 million to 5 million barrels a day threatens to undermine the Baker Plan even before the US Treasury Secretary's bold shift in policy produces any firm results.
It is rapidly becoming obvious that a move which was intended to inject a little growth into Third World economies has in fact damaged them as the price of oil tumbles. Growth in the industrial nations is also likely to be less than spectacular.
The irony is not lost in Mexico (total foreign debt $98 billion), Venezuela ($33 billion), nor in Nigeria ($18 billion), three of the 15 suitable case for treatment on Baker's list (see page 52).
The immediate future of the plan, one senior New York banker said, can be summed up in four words: "Mexico, Mexico and Mexico'. Based on spot oil prices of $23 a barrel, Mexican officials earlier in the year suggested passing around the hat for some $4 billion in new money, $2.5 billion from the commercial banks. A week or two later David Mulford, US Treasury assistant secretary for international affairs, thought the Mexicans would need more than $6 billion.