North/South: The United States Responds to the New International Economic Order

Endings, not beginnings, preoccupied the makers of American policy in the era of the New International Economic Order (NIEO). The collapse of the international monetary system; the expiration of cheap oil, which had fueled the postwar resurgence of industrialized societies; the disgrace of Richard Milhous Nixon; the crisis of American world leadership, even of the Cold War international order: these were among the transitions that American leaders were struggling to navigate when President Houari Boumediene of Algeria took the floor at the United Nations in April 1974 to demand the creation of a New International Economic Order that would redistribute wealth from the industrialized societies of the global north—“the powers of domination and exploitation”—to the countries of the global south. The United States did not choose the confrontation, but as the industrialized world’s wealthiest and most powerful country and the superintendent of the world’s economic and political orders, it fell to the United States to respond.1

Understanding Washington’s response to the NIEO’s challenge requires situating that challenge amid a general crisis of postwar institutional arrangements. This crisis divided the West, defined here as the alliance of capitalist countries that the United States had rallied for Cold War purposes, and encouraged the global south to devise and promote alternative conceptions of international order. The poor countries that caucused as the Group of 77 (G-77) and championed the NIEO invoked the colonial era to explain their own poverty and justify remedial action, but they looked forward, not backward, entertaining a clear concept of the new order they hoped to build. Focused on the sustenance of a faltering status quo, American leaders faced the future with no such clarity. Instead, leaders in the United States and elsewhere competed with the NIEO’s proponents and with one another to respond to the Third World’s challenge. Some favored prudent appeasement; others envisaged counteroffensives. Some hoped that postwar arrangements might yet be sustained; others contemplated remaking postwar institutions and arrangements on their own terms. The global south’s demand for the NIEO did not achieve its intended purpose, but it exacerbated the general crisis of the postwar order and prompted reconsideration, in the north, of alternatives to the status quo. Still, what resulted from this phase of creative turmoil, which spanned from the mid- to late 1970s, was not a remaking of international order on terms more amenable to the world’s poorest people. On the contrary, the market-oriented solutions that emerged from the crisis of postwar arrangements in the 1970s would prove to be even less conducive to broad-based economic development than the old order had been.

Focusing on the United States, this essay charts the evolution of official responses to the NIEO’s challenge in the mid-1970s. It begins by situating the NIEO’s challenge within a general crisis of postwar arrangements in the 1970s. The central part of the essay follows the evolution of U.S.-led responses to the NIEO from the spring of 1974, when Boumediene issued the G-77’s demands, through to the end of 1976. During this phase, U.S. secretary of state Henry Kissinger pursued a strategy of constructive appeasement—what I call his “southern strategy.” This strategy aligned with the recommendations of globalist think tanks such as the Club of Rome and the Trilateral Commission, but it encountered stubborn obstacles within and beyond the executive branch of the U.S. government. Domestic politics, in particular, constrained constructive engagement. After Kissinger, the essay concludes, accommodation of the kind that Kissinger sought continued to encounter durable obstacles, as the experiences of the Carter administration would confirm.

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