Page 368 - Arabia the Gulf and the West

The Masquerade 365

nationalization and winning some converts, especially among the radical Arab
governments. Yamani, however, was more inclined to heed the warning
signals put out by such experiences as that of Algeria with CFP and
ELF-ERAP, and to proceed to the goal of nationalization by stealth, i.e.
through participation.
One obstacle to the introduction of participation at this stage was the
unfavourable impression it would have created in the world at large of the
producing countries’ greed, coming so soon after the tax rate, i.e. their share of
the oil companies’ earnings, had been raised to 55 per cent. Another more
serious obstacle was a provision in the Tehran agreement itself which ran: ‘The

existing arrangements between each of the Gulf States and each of the Com­
panies, to which this Agreement is an overall amendment, will continue to be
valid in accordance with their terms.’ In other words, existing concessionary
and contractual arrangements were not to be disturbed. A demand for partici­
pation would constitute a violation of these arrangements and, therefore, a
breach of the Tehran agreement. That Yamani was aware of this potential
obstacle is clear from a statement he made to Irwin at the time of the Tehran
negotiations, to the effect that he and the other Gulf oil ministers would never
sign the agreement if, by doing so, they were precluded from pursuing the goal
of participation afterwards. That he also intended to ignore it emerges from his

remark to Piercy of Esso, on the same occasion, that the companies were being
unrealistic if they truly expected the agreement to give them price stability for
five years. The conclusion is unavoidable that Yamani and his fellow Gulf
ministers signed the Tehran settlement in the full knowledge that they
intended to break it. So much for the ‘moderate/radical’ theories about
OPEC’s membership subscribed to then and since by trusting Westerners; so
much, too, for the assurances of the ‘moderates’ in which the State Department
reposed such faith. Perhaps the best verdict on the charade played out at
Tehran was that rendered at the time by the chairman of Bunker Hunt, the
partner of BP in Libya and the doughtiest of the independent producers:

I take little stock in the theory that certain so-called moderate producing countries
desire to isolate certain more radical countries in their demands for excessive increases.
To the contrary, it would seem that the so-called moderates and radicals are now playing
3 rather unmelodious duet.

The OPEC orchestra struck up the overture to ‘La Partecipazione’ at Beirut
on 22 September 1971, when the organization met and passed resolutions
calling for ‘effective participation’ by member states in the assets of the
producing companies. The conference also called for an adjustment of posted
prices to offset the decline in the purchasing power of oil revenues caused by
the depreciation in the international value of the United States dollar since the

eginning of the year. Once again the oil companies reacted by attempting to
orm a united front. John J. McCloy, as legal counsel for the Seven Sisters,