Page 354 - Arabia the Gulf and the West

The Masquerade 351

Thus, within the space of forty-eight hours, Irwin, MacArthur and Rogers -
to mention only the principals - had managed to undermine the entire strategy
of the combined approach worked out by the oil companies in consultation
with the State Department and the Justice Department, and in exchanges
among the United States, British, French and Dutch governments. The State
Department now proceeded to guarantee the failure of the combined
strategy - whether it intended to do so or not is a moot point - by hurriedly

convening a meeting of the member countries of the Organization of Economic
Co-operation and Development in Paris on 20 January. Its purpose, it would
seem (for the record of the meeting was not made public), was to persuade the
other OECD governments to adopt the placatory approach to OPEC that the
State Department had obviously decided upon. The United States representa­
tive is said to have assured the meeting that if no resistance were offered to
higher oil prices, they could count upon at least five years’ supply of oil at stable
or only slightly rising prices. (According to one account, the oil company
representatives who were present as observers echoed the assurance. On the
face of it, it seems improbable, unless they and their companies had got their

wires crossed.) After the meeting an OECD spokesman announced that
‘contingency arrangements for coping with an oil shortage . . . were discussed’
- a statement which was as good as an open signal to the shah and the other
members of OPEC to persist with their threat of an oil embargo as a means of
attaining their ends. It is not even certain that Irwin himself had not unwit­
tingly planted the germ of the idea of an embargo in the shah’s mind in the
course of their conversation by dwelling upon the plight to which Western
Europe and Japan would be reduced were oil supplies to be seriously dis­
rupted. Even an inadvertent hint was enough to set the shah’s fertile brain
licking, especially as statements along the same fines had begun to issue, and
were to continue to issue, from American official sources elsewhere.

Unlike the State Department, the oil companies were not yet ready to throw in
the towel. Late on 19 January, Piercy and Strathalmond held preliminary talks
with the three members of the Gulf Committee - Amuzegar, Yamani and
Hammadi. They explained that the companies’ combined approach had been
rendered necessary by the resolutions adopted by OPEC at Caracas, especially
in support of the exorbitant demands being made by Libya. It was essential,
the companies believed, to put an end once and for all to the leap-frogging of
prices by negotiating with OPECen bloc. Amuzegar said in reply that OPEC
had only authorized the Gulf states to enter into negotiations. It was up to the

companies, therefore, to alter their terms of reference, not for the member
governments of OP EC to alter theirs. If the companies insisted upon an overall
negotiation, it could only result in the adoption of the highest common
enominator for oil prices. Piercy countered these arguments by pointing out
t at the joint approach had been arrived at in consultation with, and with the