Page 373 - Arabia the Gulf and the West

370 Arabia, the Gulf and the West

lure them in they held out the prospect of French oil companies working the
North Rumailah field in southern Iraq, which had been discovered and proved
by the Basra Petroleum Company, a subsidiary of IPC. (Because North

Rumailah was in the areas covered by Law 80 of December 1961 its develop­
ment had unavoidably been held back.) When the Franco-Iraqi agreement was
eventually concluded, at a cost to France of $80 million in credits to Iraq, it
committed CFP to lift its full share of Iraqi oil (to which it was entitled anyway
as a partner in IPC) for the next ten years - a commitment which CFP had
earlier rejected as too expensive. France also acquired the right to buy addi­
tional oil at higher prices. As for the North Rumailah field, the Iraqis kept it for
themselves and called in the Russians to exploit it.

The nationalization of the Iraq Petroleum Company (which was not uncon­
nected with the Iraqi government’s irritation at the declining volume of oil
being lifted at the Mediterranean terminal) was announced to the other Arab
delegates at the petroleum congress in Algiers on 1 June 1972. Elated by the
Iraqis’ audacity, the delegates sent a joint message of congratulation to Bagh­
dad on 2 June. Later that day they were addressed by James Akins of the State

Department, who was attending the congress as an observer. Although he
counselled the delegates against rushing impetuously into schemes of national­
ization, Akins also expressed his personal opinion that the expropriation of
IPC’s concession was not necessarily ‘the unmitigated disaster which I’m sure
is being predicted in London, Paris, The Hague and New York’. ‘I’m also
certainly not going to say that the old concessions were writ on tablets of stone,’
he went on,

or that they couldn’t or shouldn’t ever be changed. The companies themselves have
been remarkably flexible ... [they] have yielded under the sledge-hammer blows of the
producing countries. All the changes have been in the favor of the producing countries.
I don’t think you have any reason to be ashamed of your success so far. I’m just
suggesting that it might continue to be of benefit to the producing governments to
continue to bend, not to break, this steel rod [i.e. the companies].

So mild a reaction from a senior official in the United States government to the

nationalization of IPC, in which American oil companies had almost a
quarter-interest, can only have surprised and delighted the assembled Ara 01
delegates. There was further cheer for them both in the implicit acceptance y
Akins of the validity of the doctrine of ‘changing circumstances (with w 1C
OPEC sought to cloak both its rapacity and its contempt for the sancuty 0
contracts) and in his tacit encouragement of their continued use of the ev’ce °
participation to secure larger revenues without doing anything to earn t Q
To leave them in no doubt of his belief that they were entitled to con

seek ever higher prices for their oil, Akins volunteered the further com
that ‘on this question the consumers have had their heads tn the san s>
Xuon of especially stupid ostriches..A few of his hearers must surely