Not with a bang but a whimper. That's how the poet said the world would end, and that's the way the International Natural Rubber Organization appears to be ending. Reports from Southeast Asia aren't encouraging to fans of the price stabilization group. INRO officials say they can't continue operations unless Thailand withdraws its resignation, and Thai officials stand firm on resigning.
So INRO probably will meet in December and figure out an orderly way to liquidate itself and its stockpile of NR.
This is a sad end for a trade pact reputed to be the only truly successful world commodity agreement. In the end it fell victim to the same pressures that killed the others-politics and national pride.
The consumer members of INRO did everything conceivable to please the NR-producing nations that wanted the pact. It was, the consumers felt, a way to lend financial support to the emerging democracies in Southeast Asia.
When the producers insisted on denominating buffer stock price ranges in Southeast Asian currencies, consumers agreed. This assent came back to bite them in 1997 when the value of Southeast Asian currencies tumbled. Price ranges remained artificially high while real NR prices fell, and this in turn tied the buffer stock manager's hands when he should have been buying rubber to raise prices that had fallen to near-historic lows.
The reaction of Malaysia and Thailand to the problem was to withhhold the buffer stock funds they owed INRO, saying they could control prices more effectively by buying up their own rubber. Finally, they resigned.
After INRO, what? Thailand seems convinced it can raise prices through a producers-only organization. Others don't share Thailand's confidence when NR is both plentiful and-in some applications-replaceable.
Some think producers eventually may long for a return to INRO. But consumers, having let producers call the shots once, won't let them do it again.