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The ‘Sting’ 433

the unscrupulous use of monopoly power. To encourage the Middle-Eastern

members of the OPEC cartel to employ these gains, this veritable ‘Monopoly’
money, in the purchase of Western industrial and commercial assets is tan­
tamount to making them a gift of these assets. Equally, for the West to try to
recoup the sums it has paid out for excessively over-priced oil over the past few

years by contracting to sell the Arabs and Persians great quantities of industrial
manufactures, including an inordinate amount of costly armaments, is a policy
as dangerous in practice as it is objectionable in principle. If the orders for such
manufactures and weapons are cancelled, as they so often are, the Western
world will still be burdened with high oil prices without being able to offset

them by means of increased exports.
It is just as futile to attempt, as some Western governments have attempted,
to evade the financial consequences of paying too high a price for oil, and at the
same time to ensure their oil supplies, by entering into barter arrangements

with Middle-Eastern governments - oil in exchange for manufactures, arma­
ments, raw materials and help with industrialization - along the lines of those
concluded in recent years by the Soviet Union and her Eastern European
satellites. Barter arrangements, of their very nature, must be of long duration,
with the price of oil fixed accordingly, usually on a sliding scale, ostensibly to
allow for inflation but really to act as a douceur to the Middle-Eastern govern­

ment concerned. Such arrangements only serve to hamper the operation of the
market in crude oil, impeding any fall in prices which might otherwise occur
through competition, a decline in consumption or the discovery of new oil

deposits outside the Middle East. Even Muhammad Reza Shah, who strongly
favoured barter agreements, confirmed this fact when in February 1977 he
rejected suggestions that the exchange of oil for goods tended to undercut
OPEC prices. ‘We sell our oil at OPEC prices,’ he said. ‘Whoever buys our oil
would have to pay the price set by OPEC.’

Aside from their economic drawbacks, barter arrangements entail very real
risks of undesirable political entanglements. The volatile political condition of
the Middle East makes it a virtual certainty that sooner or later a situation will
arise in which a Western oil-consuming country will be faced with a demand
for political support from a Middle-Eastern oil state, under pain of forfeiting its

access to oil supplies. Middle-Eastern governments do not distinguish in their
relations with other states between purely commercial arrangements and
political engagements. Far from exempting commercial agreements with other
states from the scope of any dispute in which it may become involved, a

1 dle-Eastern government will regard these agreements as reinforcing the
0 igations of those states to take its side and lend it active assistance. The
w?C?ntents and irritants which abound in the Gulf and in the Middle East as a
...? e are a c°nstant potential source of political upheavals and armed hos-
ties. Who can foretell when one of these discontents or irritants will erupt

insurrection, war between states, or violent dissension just short of war?