NIXON'S PATIENCE THIN DOLLAR MAY BE DEVALUED USA - EEC TRADE WAR IS HOTTING UP

THE NIXON administration is planning a major NIXON administration is economic blow against Europe. It aims to win trade economic blow against Europe. It monetary advantages through what balance-of-payments problems.

Press FUND TREMENDOUS RESULT!

JANUARY new and exporting its As Tory premier Edward Heath prepared for talks with the American leader in Washington, there were heavy hints from administration officials that another monetary shakeup is due in the near future.

In his preface to the annual report of the Council of Economic Advisers, Nixon strongly indicated that his patience with Europe and Japan is becoming exhausted.

Reviewing the continued adverse trend of the American balance of payments, despite the currency realignment agreement of December 1971, he warned 'this is not a situation that can go on indefinitely. He added: 'We want to bring about those reforms that will permit us to earn our way.' According to "The Times' correspondent in Washington, there is 'strong evidence' to show that Nixon has concluded that the December 1971 realignment will not 'secure the desired improvement in the US balance of payments'.

He considers that 'further reforms to bring the world into "better balance" in economic transactions is necessary, the paper adds. Nixon faced a record balance of payments deficit of $6,439m • in 1972 and many of his officials regard this figure as an underestimate.

There is a growing fear among European financiers and governments that the dollar will be devalued, making the vast amounts of US currency in their hands worth even less than they are now.

This explains the dollar's extreme weakness on all European foreign exchange markets this week. It was supported at or near its floor by central banks in Holland, Belgium, France and Denmark on Tuesday, while in West Germany and Switzerland, it fell to a very low price.

The devaluation threat could produce panic conditions on the European foreign exchanges, above all among the holders of the estimated $60,000m overseas dollars circulating in the SO-called Euro-dollar market.

A devaluation would place the US at a competitive advantage by comparison with its European and Japanese competitors. would also wipe out a slice of the huge overseas debts accummulated by US imperialism.

A whole series of competitive devaluations and downward 'floats'-along the lines already pioneered by the Tory government-could result.

At the same time the rush to find assets which would retain their value could produce a major gold price rise.

So Edward Heath's US visit assunes considerable importance —it will be the opening clash COULD YOU LIVE oM £275 peram MRST HATCHER in Nixon's planned 'year Europe' when US efforts will be concentrated on smashing capitalist rivals economically.

According to the original timetable, the opening shots were to have been fired • in March, when US officials confront their EEC counterparts to demand compensation for Common Market enlargement.

Then the big clash was to have opened in September at the multilateral GATT trade talks.

Now it appears that the rapid disintegration of the December 1971 currency: realignment and the continued worsening of the US balance of payments is driving the Nixon administration to act far sooner and more drastically than originally planned.

Tod ay's

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