Page 367 - Arabia the Gulf and the West

364 Arabia, the Gulf and the West

oil-producing country might find its economic interests considerably shaken
and bruised as a consequence.
Though the ink on the Tehran agreement was barely dry it was patently
obvious that OPEC was already hungry for higher oil revenues. The shah, in

particular, irritated by the advantageous settlement Libya had won, was
determined for reasons of prestige as well as cupidity to equal or even better it.
Lip-service, however, had still to be paid to the Tehran settlement if only to
prevent the United States government from becoming uneasy. After his depar­
ture from Tehran in January 1971 John Irwin had visited Kuwait and Riyad
where he had obtained assurances from both the ruler of Kuwait and King
Faisal, similar to the one he had been given by the shah, that there would be no
interruption of oil supplies to the consuming countries, and that the settlement
reached with the oil companies at Tehran would be honoured for its full term.

Evidently the State Department attached considerable weight to these assur­
ances; for in testimony before the House Foreign Affairs Committee in July
1971 Akins expressed his conviction that the Tehran agreement would last the
full five years. How, then, the shah and his fellow Gulf rulers must have asked
themselves, were they to find a way of increasing their oil revenues still further
without violating their promises and thereby disappointing the State Depart­
ment’s hopes in them?

They found the answer in ‘participation’, a device by which they could
acquire a share in the assets of the oil companies operating in their territories,
and with it a higher proportion of the earnings from oil production than they
received from royalties and taxes alone. Saudi Arabia’s oil minister, Ahmad
Zaki al-Yamani, was particularly taken with the idea of participation and not
just because of its financial allurements. Although he sat on the board of
ARAMCO as a Saudi government nominee, he had no real voice in the
company’s operations or in the determination of its policies, a deprivauon
which he found irksome. Like his predecessor, Abdullah al-Tariki, Yamani

was an ARAMCO protege, who had been sent for his higher education to
American universities. He had emerged from the business school at Harvard
convinced that his grasp of economics, of the oil industry, and of the lega
questions associated with it was such as to put him on an equal footing with the
chief officers of the major international oil companies. While Yamani ha
derived many of his notions about government-company relations from Tan
(perhaps more than he was in later years prepared to acknowledge), he was

more circumspect than his exemplar had been in putting them into pracuce.
While Tariki’s intemperate pursuit of his plans to reverse the balance of powe
between companies and governments had led to a steady deterioration 0
relationship with ARAMCO and to his own eventual dismissal and expuisio
from Saudi Arabia, Yamani preferred the subtler approach andI so ep
relations with ARAMCO intimate and warm. Tariki still travelled th1W
circuit as an adviser on oil questions, preaching the doctrine