Oil and investments-°Pinion
(Continued from Page 4)
The early seventies brought
with them some apparent shifts in
the balance of power between the
oil monopolies, backed by their
own governments, and the local
oil producing states. The area was
swept in a period of rising
nationalism and radicalism, and
the companies found it necessary
to change tactics and change the
form of the agreements. In most
cases the real essence of the ag
reements, however, didn't
change. The old concession ag
reements were replaced by
“long-run” buying agreements.
This latter form gives the com
panies the following basic rights:
1. the companies have the right to
continue to produce the oil as
“operating contractors 2. the
companies have the right to buy a
certain agreed-upon percentage
of the oil output at a price equal to
around 93 per cent of the market
price; 3. the pricing of the oil is still
influenced by the companies
through their highly valued "ex
pert" advisors to the local gov
ernments and through their al
most total control over the oil mar
keting and refining in the Western
countries.
We can see that despite the ap
parent nationalization of the oil,
the companies are still able to
achieve their main objectives,
namely, the control of operation,
transport, refining and marketing
of oil. The local governments are
still unable to perform any of these
functions, and they will likely con
tinue to be unable to do so for a
long time to come. Both the local
regimes and the oil companies are
not willing to help develop these
skills for fear they might one day
be replaced and no longer con
tinue to reap the major portion of
their profits.
INVESTMENT
The multi-national corpora
tions, always alert for new mar
kets to sell, their wares and for in
vestments that would reap larger
profits abroad than at home, have
fixed their sights on the Gulf. Iran
and Saudi Arabia, the largest oil
producers, have received the
greatest attention from the multi
nationals, and it’s these two areas
that we will describe in detail.
However, it should be remem
bered that the other Gulf states
follow a similar pattern and the dif
ference is only a matter of de
grees.
IRAN
Private foreign investment in
Iran, 1963-68, amounted to over
$1 billion; 80 per cent of which
came from three countries; the
U.S. (65 per cent), Great Britain
and West Germany (14 per cent).
Major investments were in pet
rochemicals, tires, pharmaceuti
cals, chemicals, mining ana elec
trical manufacturing. In the pet
rochemical industfy three huge
plants have been started as joint
ventures between B.F. Goodrich,
Standard Oil of Indiana, Allied
Chemical and the Iranian Gov
ernment. A copper mining project
which will cost hundreds of millions
of dollars is being developed by
Anaconda Copper. Other U S.
companies involved in Iran are
General Motors, Ford, Union Car
bide and Westinghouse. The U S.
multi-nationals are not the sole in
vestors. Iran's Fifth Development
Plan, 1973-78, includes invest
ments from West Germany total
ing $2.8 billion and $1.5 billion
from Japan. In agriculture the
largest company is Iran is the H-N
Agro-Industry of Iran and
America, made up of American
and Iranian stockholders. Other
American companies involved in
agricultural expansion are Dow
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Chemical, the Bank ot America
and John Deere & Co. Those whc
have suffered from the land re
form program and agri-business
expansion are the small land
holding peasants and farmers in
rural areas, hundreds of
thousands of whom have been
forced off their lands because of
huge irrigation and construction
schemes which benefit mainly
these companies
SAUDI ARABIA
In Saudi Arabia both the U S
Government and the multi
nationals are involved. The U.S
Labor Dept, aids in manpower
training, the Census Bureau de
velops Saudi statistics, and the
U.S Army Corps of Engineers
acts as the engineering and con
struction boss of many Saudi pro
jects. (Recently the Corps built a
commercial ariport and the Saudi
TV system which is sub
contracted to RCA.) On the
civilian side, TWA runs the na
tional airlines; Green Co. of Iowa
is building roads; Chase Manhat
tan Bank and White. Weld & Co. (a
New York brokerage house) are
giving financial advice; Hospital
Corp. of America is in charge of
the King Faisal Specialist Hospital
and the Research Center in
Riyadh, and over one half of its
employes are American.
RECYCLED PETRO
DOLLARS
The sudden increase in the oil
production in the Gulf Region was
accompanied naturally by an in
crease in investment by the oil
companies, but it was also ac
companied, and much more so,
by an outflow of revenues which
were invested in Western Europe
and the U.S. A portion of the
petro-dollars are deposited in
major banks, here and abroad,
and used to pay for vast amounts
of food, arms, construction mater
ials and other products that are
imported from both the indus
trialized and underdeveloped
world Another portion pay for
stocks, treasury securities ($10
billion in the U.S. alone), real es
tate and other investments in sev
eral industrialized countries Iran
for example, recently purchased
interest in Krupp and Mercedes
Benz. The rest of the petro-dollars
are used for direct loans to the
developing world, short-term
loans to the industrialized nations
or remain on deposit in leading
banks forming the base for in
creased lending of all kinds.
Because the S60 billion annu
ally received by the Gulf regimes
fill the coffers of the Western in
dustrialized countries and the rul
ing royal families, the people of
the Gulf continue to be among the
poorest in the world. For example,
the number of doctors in these
countries is 2.7 per 10,000 in
habitants compared with 15.6 in
the U S. and 17.2 in West Ger
many. The number of hospital
beds is 19.4 per 10,000 inhabit
ants as against 142.9 in Sweden.
The World Health Organization
indicates that the minimum re
quirements call for investments of
about $35 billion annually. In edu
cation approximately 80 per cent
of the population of the Gulf are
illiterate (92 per cent among
women), and it is estimated that a
minimum of $25 billion is needed
annually to provide adequate
education for the people. As for
the other sectors (industry, trans
port, agriculture, etc ), the re
quirements are staggering.
Only a vast military network can
sustain regimes that ignore the
needs of their people. The next
article in the series will deal with
Arms Build-up in the Gulf.
Submitted by the
Gulf Solidarity Committee