Page 356 - Arabia the Gulf and the West

The Masquerade 353

counter-proposal that might be put forward would have to be considered by
both teams. These precautions, however, could not conceal the fact that the
companies had, within a brief space of time, backed down from their first and

most vital principle - a single combined negotiation with OPEC. With this
concession the slide began, and it was not to stop until the companies had given
way on nearly every issue.
Strathalmond informed the Gulf committee - Arnuzegar, Hammadi and
Abdur Rahman al-Atiqi (the Kuwaiti oil minister who was standing in for
Yamani) - of the new arrangements on 21 January. Arnuzegar and his fellow
triumvirs immediately rejected the condition that a price settlement in the Gulf
should be linked to one in the Mediterranean. Instead, they said, they were
prepared to give ‘all the assurances’ the companies might require against future
leap-frogging, and Arnuzegar volunteered to set down these assurances, along
with a number of other provisos and conditions, including a stipulation that

negotiations should end by 1 February so that the results could be presented to
a full conference of OPEC on 3 February, in a letter to Strathalmond.
The London Policy Group promptly instructed Strathalmond not to accept
such a letter. If it was forced upon him, they said, he should reply to it in
writing, to the effect that the companies’ view was that it was ‘in the long-term
interest of both producing and consuming countries alike, as well as that of the
oil companies, that there should be stability in the financial arrangements with
producing governments’, and that the companies consequently ‘cannot agree
to a settlement in the Gulf which would be independent of other areas’.

Strathalmond, however, chose to reject these instructions at the urging of the
British and American ambassadors, Wright and MacArthur, who feared an
immediate breaking-off of negotiations if Strathalmond were to act on them.
Instead, on their advice, he accepted on 23 January a letter signed by
Arnuzegar, Yamani, Hammadi and Atiqi repeating much of what Arnuzegar
had said to Strathalmond two days before, and insisting that a price settlement
be reached with the Gulf countries in isolation. Negotiations towards such a
settlement were to begin within the week.
The next day the shah gave a press conference - his first in twelve years. It
lasted for two and a half hours, a good deal of which was taken up with an
abusive tirade against the oil companies. He condemned the idea of an overall
negotiation with OPEC, vilified the companies for their stand, saying that they

should be got rid of, and warned the Western powers not to support them. ‘If
the companies form a powerful cartel in the belief that they can put pressure on
the producing countries,’ he declaimed, ‘and if industrial nations stand behind
them, we will have the most detestable expression of economic imperialism and
neo-colonialism.’ He went on to threaten that if the companies persisted in
their combined approach, the Gulf states would legislate to raise the tax rate to
60 per cent. Nor would this be all. At the forthcoming OPEC conference he
himself would make sure ‘that the question of cutting off the flow of oil will be