Page 361 - Arabia the Gulf and the West

358 Arabia, the Gulf and the West

the Iraq Petroleum Company were almost of the same order of churlishness on
their side and patient meekness on the company’s as they had been in the

case of the Libyan negotiations. Relations between IPC and the Iraqi govern­
ment had been strained for a decade, ever since the military government of
Abdul Karim Qassim had expropriated 99I per cent of the company’s conces­
sion areas by the notorious Law 80 of December 1961. Since the accession of

the Baath to power these relations had grown worse with each passing month,
in spite of a series of accommodations made by the company to mollify the Iraqi
government. A price rise of 80 cents a barrel was finally agreed in the first week
of June 1971, bringing the Mediterranean price of Iraqi oil to $3.21 a barrel.
The Saudis also settled with ARAMCO for an increase of 81 cents a barrel,

which raised the Mediterranean price of their oil to $3.18 a barrel. The other
provisions of the two agreements followed those of the Libyan settlement, and
the whole Tripoli agreement, as it was called, was to remain in force for five
years.
As soon as he learned of the terms of the settlement the shah was almost

beside himself with anger and chagrin. Gone was the air of statesmanly
reasonableness which had marked his recent gracious assurance to the Western
powers that he would honour the Tehran settlement for five years. The
‘Shadow of God upon earth’ had been overshadowed, and immanent majesty as
well as regal avarice required that the situation be promptly put to rights.

Before relating how he went about doing so, however, we must first turn to the
Franco-Algerian oil dispute and its outcome; for at its core lay the very notion
that the shah had propounded during the Tehran negotiations, to the effect
that the OPEC governments should by-pass the oil companies and conclude
agreements on oil supplies and prices directly with the governments of the

oil-consuming nations.

The basis upon which French oil companies would continue to operate in
Algeria after independence had been agreed during the negotiations at Evian in
1962 which ended French rule in the colony. The regime laid down for the

operation of the oil industry was supplemented by an agreement concluded in
July 1965 which set a tax rate for Algeria of 55 per cent, and a price per barrel
for Algerian oil of $2.08, a high figure for those days. Algeria was also grante
effective control over sales of natural gas. On the French side, it was hoped that

the arrangement would eventually provide France with up to one-third 0 er
oil supplies (she already drew almost a quarter of them from Algeria) by way 0
a direct agreement with the Algerian government, thereby reducing er
dependence upon sources of supply in the Middle East controlled by t e maj

international companies. November
The arrangement was not seriously called into question until M
1969, when a series of what were to prove long-drawn-out discussions e
the French and Algerian governments was initiated to resolve a num