Page 333 - Arabia the Gulf and the West

330 Arabia, the Gulf and the West

dislocation caused by the Arab oil embargo to increase their own exports of oil,
and the shah was reluctant to lose the additional income he was receiving and
which he needed to translate his dreams of glory into something approaching
reality. He had professed great indignation in public over the revelation that
the oil companies which comprised the consortium producing Persia’s oil had
an agreement among themselves to restrict the amount of oil each of them
could lift every year. The limitation, as he knew full well, was essential if the

price of oil was not to be driven down even further in the depressed world
market. Despite this knowledge he proceeded to insist at the close of 1967 that
the companies raise their output by 20 per cent annually, justifying his demand
by a pious reference to his selflessness in allowing production to be increased
from June 1967 onwards to compensate for the shortage caused by the ephem­
eral Arab oil embargo. To mollify him, the consortium companies offered to
give up a quarter of their concessionary area and to increase the volume of oil
supplied to the National Iranian Oil Company for subsequent sale to Eastern
bloc countries. All concerned, however, were well aware that it was only a
stop-gap measure; the shah’s appetite had been whetted and he would be back
for more.
Although OPEC’s measures against the oil companies had so far been of a
minor order only, its ambitions were growing larger. The organization’s

membership had expanded and eventually was to include, along with its five
founders, Algeria, Libya, Qatar, Abu Dhabi, Indonesia, Nigeria, Ecuador and
Gabon. Its confidence was mounting, step by step, as that of the West wavered,
and the turn of events in the Middle East and elsewhere in 1968 offered the
chance to make further gains. At the start of the year the British, after
abandoning Aden, had announced their intention of quitting the Gulf by the
end of 1971. The Americans, distracted by the war in Vietnam, by domestic
turbulence and by the approach of a presidential election, were unlikely to give
much thought to the implications of the British withdrawal. Western Europe
had its own distractions - the Russian occupation of Czechoslovakia, the
student evenements in Paris, and the fleeting spectre of red revolution that these
conjured up in impressionable minds. With an agreeable feeling that wider and
rosier horizons were opening up before them, the oil ministers of OPEC
gathered in Vienna in June 1968 for their sixteenth conference. After only a

modicum of discussion the delegates passed a resolution (the ninetieth in a line
stretching back to i960) setting out the policy they intended henceforth to
pursue towards the oil companies operating in their territories.
The resolution enunciated a novel doctrine of ‘changing circumstances to
justify not only the revision (‘at predetermined intervals’) of the terms an
conditions of any concessionary agreements, but also the acquisition by , e
governments of the oil-producing countries of ‘a reasonable participation m
existing concessions and ‘progressive and more accelerated relinquishments 0
concessionary areas by the concessionaires. Tax and royalty payments were