Page 269 - Arabia the Gulf and the West

266 Arabia, the Gulj and the West

pour them all in the direction of the United States. It has already, over the past
few years, made large purchases from Britain and France, and even since the
confirmation of the mutual economic understanding with the United States in
the spring of 1977, it has placed further substantial arms contracts with these
two countries. It may have good political and practical reasons for doing so, but
this is precisely the point being made here. Moreover, the same or similar
political and practical considerations may at any time dictate not only the
liquidation of Saudi Arabia’s financial investments and deposits in the United
States, but also the depositing of the bulk of her future surplus oil revenues
elsewhere.
So far as oil supplies are concerned, the Saudi minister of petroleum, Shaikh

Ahmad Zaki al-Yamani - who has publicly denied the existence of any mutual
economic understanding between his country and the United States - has
huffed and puffed mightily about Saudi Arabia’s ability to lower or raise her oil
production at will, whenever political considerations may call for it. It is not
exactly a well-founded boast: Saudi Arabia cannot drop her oil production to 4
million b/d - the figure Yamani has mentioned as sufficient to meet the
country’s financial needs — without imperilling her ambitious development
programme. Likewise, experience has shown that production cannot be raised
above 8.5 million b/d for any sustained period of time because of technical
difficulties, as will be seen in a later chapter. Despite the fall in world demand
for oil in 1977 and 1978 Saudi Arabia kept her production at the highest
possible level, to the detriment of the share of the world market enjoyed by the
majority of the other members of OPEC. If the Saudi government is prepared
to treat its partners in OPEC in this fashion, in order to safeguard or even
increase its income from oil, what grounds are there for assuming that it will
behave otherwise in its relations with the United States? Or, since its need for
money seems so pressing, that it will not increase the current price of oil even
further so as to raise its revenues?
One of the conditions referred to earlier as necessary to the successful
working of the economic relationship the United States has established with

Saudi Arabia, viz. that oil prices should remain constant, has already been set
at nought. Should Saudi Arabia continue to go back on her undertakings to the
United States government, it is difficult to visualize that government, on its
record to date, taking any effective countermeasures to enforce compliance.
The habit of accommodation is too strong, the legacy of ARAMCO too
influential. Whenever in past years the Saudi government has demanded
additional revenue payments from ARAMCO, payments not provided for in
the concessionary agreements, ARAMCO has unfailingly found a way to
satisfy those demands. What was at stake - access to the largest pool of oil in t e
world - was considered too valuable for questions of principle or honour to e
allowed to jeopardize it. (There was also the sobering example of the exPr0P"2'
tion of the Anglo-Iranian Oil Company’s assets in Persia to be considered.) 1 e