Page 365 - Arabia the Gulf and the West

362 Arabia, the Gulf and the West

have more than absorbed the 500 million francs he was offering in compensa­
tion to the companies. All this was too much for even the French government
to stomach. Negotiations were again broken off, and the French declared the
whole system of economic co-operation between France and Algeria estab­
lished by the Evian accords of 1962 and by the oil agreement of 1965 to be at

an end. Henceforth, the French government stated, all economic relations
would be conducted on a purely commercial basis: the oil companies would
resume sole charge of any negotiations with the Algerian government on
matters affecting them, and it would be up to them to decide whether there was
any future for them in Algeria.
As was to be expected, the Algerians responded by making life miserable for

the French employees of the oil companies in Algeria. The harassment led
CFP and ELF-ERAP to withdraw their technicians and to declare a boycott
of Algerian oil. Legal action, they said, would be taken against any purchasers
of Algerian oil while the issue of proper compensation for the nationalized 51
per cent of their operations was still undecided. CFP and ELF-ERAP also
informed the World Bank and private American banks of the existence of the
dispute, with a view to halting the negotiations which were then going on for
the provision of financial and technical assistance to Algeria to develop her

natural gas industry. Some support for the companies’ stand was given by the
United States government, which was by now growing a little uneasy over the
course that events had been taking since the Tehran settlement the previous
February. On its advice, the completion of the contract between the Algerian
SONATRACH and the El Paso Natural Gas Company for the exploitation
and sale of natural gas was put into cold storage. In contrast, little positive

support for the Algerian position was forthcoming from most of the members
of OPEC, or even from OAPEC, the Organization of Arab Petroleum Export­
ing Countries. Apart from the obligatory avowals of solidarity from these
organizations, the only belligerent noises came from Libya and Kuwait, who
threatened retaliatory action against any oil company which complied with the
French boycott. For their part, CFP and ELF-ERAP had no difficulty in
obtaining supplies of oil elsewhere to make up for the loss of Algerian crude,
whereas the Algerians were hard put to it to find buyers willing to break the

boycott.
In these circumstances it seemed only sensible for the French companies to
continue to hold out until the Algerian government had second thoughts about
the blessings to be gained from ‘bringing the revolution into the oil sector an

exercising its ‘fundamental options’. Yet, surprisingly, in mid-May I971
extended an invitation to the Algerians to resume talks. Whether the com?a”
did so at the behest of the French government or not is unclear, thoug it is
from unlikely. The Algerians accepted, and on 17 June CFF TRaCH
RACK came to an agreement about their future relationship. su .
would retain a 51 per cent shareholding in CFP’s Algenan operations, paying