Page 424 - Arabia the Gulf and the West

The ‘Sting’ 421

with more zeal than the British chancellor of the exchequer, Anthony Barber,
who, in company with the secretary of state for trade and industry, Peter
Walker, flew to St Moritz on 24 January. The strike of coalminers and
electricity workers, combined with the oil shortage, had compelled the Heath

government to introduce a three-day working week in British industry on 1
January. Heath plainly felt his administration to be tottering, a belief which
was perhaps more a reflection of his own gravelled state than it was of the actual
political situation. There was an air of desperation, even of panic, in his
dispatch of two of his senior ministers to intercede with the shah for help in

overcoming his domestic economic difficulties.
Barber and Walker were accorded a fitting reception. They were met at the
airport by a Persian who, according to an eye-witness, said he was not import­
ant enough to give his name. He was dressed, ‘more suitably for the garden in
rollneck sweater and baggy, brown trousers’, and he had arrived in an
unwashed Cadillac in which he was to escort the ministers to St Moritz. The

shah, he said, was out skiing, and the finance minister, Amuzegar (the ‘shadow
of the Shadow of God’), was ‘around - I think’.
The shah, when the two ministers were admitted to his presence, was most
affable. He would grant Britain an extra five million tons of oil in 1974-5, he
said, in exchange for British goods valued at something over £100 million,

including chemicals, synthetic rubber and fibres, paper, newsprint and steel.
He was also prepared to contemplate the development of a more intimate and
extensive economic relationship between Persia and Britain, which would
include Persian investment in British industry. A jubilant Walker returned to
London to inform Parliament of his triumph. He drew special attention to the
fact that the price for which he had obtained the oil, just over $7 a barrel, was
much less than that paid for Persian oil at auction a few weeks earlier. So it was,

but the auction prices were generally acknowledged to be freakish, and the
price of $7 a barrel was what the Persian government would have received in
tax and royalties from the new posted price of $11.65 a barrel, and exactly what
BP, who were forced to accept this oil whether they wanted it or not, would
have paid for it anyway. The other side of Walker’s ‘bargain’ was even less of an

accomplishment. Some of the goods to be bartered in exchange for oil, notably
chemicals and rubber, were in short supply in Britain herself. Moreover, the
goods as a whole were to be supplied at prices fixed at the time of the
agreement’s signing, regardless of any fluctuations thereafter. By the time that
the last shipment had been dispatched the total cost of the goods had risen to
£123 million, exclusive of the administrative expenses incurred by the British

government in handling the whole transaction. So the real cost of the ‘cut-
price oil was around $9 a barrel, or about $2 a barrel more than it would have
Cost if it had been purchased from BP or one of the other partners in the Persian
consortium.
While Walker had been demonstrating to the House of Commons his grasp