The 10th annual economic summit that begins in London tomorrow comes against a backdrop of rising concern about a possible disruption of Persian Gulf oil supplies stemming from the Iran-Iraq war.
For that reason, the conference presents a unique opportunity for the leaders of the Western industrial nations and Japan to reach a common front in dealing with the whole issue of global oil supplies - as well as ensuring that the current global recovery remains on track.
The oil issue, of course, was originally expected to be but one small part of a larger agenda that includes high interest rates, US budget deficits, the overvalued dollar, third-world debt, and the stability of the American banking system in the wake of the recent difficulties of Continental Illinois National Bank. Indeed, there is little doubt that high interest rates and third-world debt will continue to occupy most attention during the conference - since taken together they represent perhaps the greatest long-range challenge facing the industrial nations.
Still, short of strong pressure on the United States government in general and Mr. Reagan in particular, there is no present evidence that the conference will be able to produce any meaningful policy recommendations as to how to get interest rates down. In the long run, it is the US Congress and the White House that will have to take the steps necessary to reduce budget deficits, thus helping to ease upward pressure on interest rates.
What does seem possible, however, is that - given some resolve - the London summit could agree on a meaningful policy to help ensure that any disruption of oil supplies through the Persian Gulf did not lead to the type of price and supply disruptions that occurred back in 1979. In 1979, with the disruption of oil supplies following the Iranian revolution, prices doubled.
To that end, the Western oil plan that the Reagan administration is reportedly taking to London this week makes good sense: Namely, joint action - quickly drawing on existing stocks to avoid sudden shortages and preventing hoarding. Western oil reserves are sizable. Moreover, excess production capacity outside the Gulf area is substantial - perhaps adding up to as much as 4 million to 5 million barrels a day.
The clear objective should be to avoid sudden price and supply disruptions.
The global economic recovery remains somewhat precarious. That is why there is a need for common resolve out of London this week that goes beyond just the usual diplomatic niceties.