Page 435 - Arabia the Gulf and the West

432 Arabia, the Gulf and the West

France and the United Slates, among others, have assured their peoples lhai

the foreign and finance ministries of the West, along with the international
financial community, are diligently applying their not inconsiderable alchemi­
cal powers to the task of transforming the surpluses into a golden windfall for
the West. Through the occult process of‘recycling’, it seems, a substantial part
of the money poured out for the purchase of oil over the past half a dozen years

is to be recouped by inducing the magnates of OPEC to invest in the West, to
embark upon expensive projects in their own countries, and to consume the
greater part of their oil revenues in lavish expenditures upon Western goods,
armaments and services.

A few observers - a very small minority, if their number is to be judged by
the rarity with which their views appear in the public prints - are far from
sanguine about the feasibility of coping with the OPEC surpluses by ‘re­

cycling’, or other forms of Western financial sorcery. Although the reduced
world demand for oil in 1977 and 1978, and the consequent surreptitious
price-cutting by OPEC members hungry for revenue, may have reduced the
financial surpluses for these years below the figures predicted by the OECD
secretariat and the US Treasury in September 1977, the reduction may well

prove to have been a transient phenomenon. The surpluses accumulated so far
donor represent a once-for-all transfer of income from the industrial countries
to the OPEC cartel, but are part of a continuing and cumulative process. This
was pointed out with some force by Thomas O. Enders, assistant secretary of

state for economic and business affairs at the Department of State, in an article
in Foreign Affairs in July 1975.

The real costs of the cartel [Enders wrote] - the long-term transfer annually of goods
and services, and the potential deterioration of the security and political position of the
industrial countries - have yet to be fully faced. As long as the cartel is effective, the
central element of energy in the industrial economies will be subject to manipulauon,
both as to prices and availability, by the supplying countries which do not have, and
may well not develop, an inherent interest in their prosperity.

If the process was allowed to continue, Enders feared, it would within a
comparatively short time do serious harm to the security and economic
interests of the industrial states, as well as to their political coherence. It is
in the interest of the industrial countries, indeed, of all consuming countries,

he concluded, ‘that conditions be created in which OPEC loses an
cannot subsequently regain the power to set oil prices at artificially hig

levels/ •
•
There is, in short, only one way to cope with the OPEC surpluses, and this is
to reduce them to marginal limits - if not to erase them completely - Y

breaking up the cartel and forcing down the price of oil. All o±er expe 1
designed to soak up the surpluses are bound to prove, as they are proving
unavailing. The surpluses are little more than ill-gotten gams, accumulated by