The Arab World: Oil, Power, Violence
Some news for the 1980s: Two Saudi Arabian princes have just joined the board of directors of General Motors, in which they are major shareholders. The Kuwait Investment Co. is erecting a chain of "Arabian Nights" motels across the U.S. The Sheik of Abu Dhabi has bought a 30% interest in the Columbia Broadcasting System, to add to a communications empire that already includes the Washington Star-News and Metro-Goldwyn-Mayer. The White House issues a statement welcoming the huge investments by "our Arab allies" as a way of stopping the dollar drain ("If they cause us trouble," adds one White House economist, "we can always nationalize them"), but it expresses some concern at reports that Libya and Iraq are negotiating with France to obtain nuclear weapons . . .
FANCIFUL, perhaps, but by no means impossible. In fact, allowing for variations in detail, this vision of the world a decade or so hence is now widely shared among economists. The world's consumption of oil is increasing by 8% a year, and U.S. consumption, now nearly 40% of the total, is rising by 8.7%. The petroleum-producing countries of the Middle East, all of which are Arab states except Iran, control 60% of the world's known reserves, and they are bargaining with increasing skill. Their income, which was $4.4 billion a year five years ago, has soared to more than $10 billion and by 1980 could easily reach $40 billion. If that holds true, the income of the Arab nations would then exceed the combined earnings of FORTUNE'S current 500 largest U.S. industrial corporations. The richest oil state of all, Saudi Arabia, which has a population smaller than that of New Jersey (about 7,000,000), would have greater monetary reserves than the U.S. and Japan combined.
If the Arab states as a whole spend only half the money they are expected to make on their oil between now and 1985, they would still have nearly $120 billion left--or almost as much as the entire world's official reserves of gold and foreign exchange today. That is enough to buy all the issued stock of all the world's petroleum companies. As James Akins, director of the U.S. State Department's Office of Fuels and Energy, writes in the current issue of Foreign Affairs: "With the possible exception of Croesus, the world will never have seen anything quite like the wealth that is flowing and will continue to flow into the Persian Gulf."
In many respects, the age of Arab wealth--and power--has already arrived. Arab oil money was a major element in the monetary crisis that led to the second devaluation of the dollar last month. Some European financial analysts claim that perhaps one-fourth of the $6 billion that flowed to West Germany in mid-February consisted of Arab-owned Eurodollars. Other experts say that the Arabs simply did what everybody else did: sold dollars to protect their holdings. Whatever the case, many international bankers are deeply concerned about the effect the Arabs' growing financial power may have on the West in the next few years. They feel that to hold meetings in Paris about the future of currencies without including the Arabs is weirdly unrealistic.
Suddenly the Arabs, 100 million strong, backward and neglected and abused for centuries, have begun to realize the proportions of the strategic weapon they hold in their hands. They have long complained of the money that Israel has received from the U.S. and Western Europe. Now they are receiving another sort of bonanza--a hundred times over. Their oil wealth is in the process of changing their history, bringing them a power they have not known since the time of the Crusades--a power that could be used for peaceful development or for violence and revenge.
Parsifal. The recent thrust toward Arab control of Middle Eastern oil began in 1970, and the man who started it all was the new, young (then 28) and hotheaded ruler of Libya, Colonel Muammar Gaddafi, who had seized power in a military coup the year before. Spurred by the instincts of Arab nationalism and pride, he rejected the prevailing royalty rates and launched a bitter, ten-month campaign for a better deal. Because the industrial world's appetite for fuel was and is insatiable, he was able to force the oil companies to increase Libya's oil royalties by 120% within two years--from $1.1 billion, or about $1 per barrel, in 1969 to $2.07 billion, or $2.20 per barrel, in 1971. These rates will continue rising 10% a year until 1975. In the process, Gaddafi has been amassing the largest gold and hard-currency reserves in the Arab world today ($2.9 billion). That radically altered both the life of his desert nation and his own position in Islam.
The leadership of the 100 million Arabs is, in the famous words of Egypt's Gamal Abdel Nasser, "a role wandering aimlessly about in search of an actor to play it." Now that Nasser is dead, now that his successors are gray and conventional, it is the implausible figure of Muammar Gaddafi that has acquired the role of an Arab Parsifal. He is a mere 31 years old, handsome, devout, ardent, even fanatical. "The Arabs need to be told the facts," he is fond of saying. "The Arabs need someone to make them weep, not someone to make them laugh." Nasser once told the young Gaddafi: "You remind me of myself when I was your age." Gaddafi was profoundly moved. To be the new Nasser is his obsession--to succeed where Nasser failed.
When Muammar Gaddafi appears in public with older Arab leaders, it is he who draws the cheers. The most belligerent of the Arab leaders, Gaddafi is spending $200 million on a largely unnecessary air force of 114 French Mirage fighter-bombers, which inevitably stands as a threat to Israel, the frustrating obsession of the Arab world. Last week two of these planes inexplicably fired on an unarmed U.S. military-reconnaissance plane in international airspace over the Mediterranean, provoking the sharpest exchange between Washington and Tripoli since Gaddafi came to power. In other spending aimed against Israel, Gaddafi gives at least $125 million a year to Egypt, about $45 million to Syria and perhaps $20 million to Yasser Arafat's Al-Fatah and other Palestinian fedayeen guerrillas. (Sudan has officially accused Gaddafi of instigating the kidnap-murder of three U.S. and Belgian diplomats in Khartoum last month.)
Gaddafi also spends millions of dollars to buy the allegiance of countries in sub-Sahara Africa, particularly those with large Moslem populations; in the past year, at least partly because of Gaddafi's largesse, Uganda, Mali, Chad, Niger and Congo-Brazzaville have all broken diplomatic relations with Israel. Gaddafi even lent $3,000,000 to the U.S. Black Muslims, but he refused further loans because he decided that the group was not truly Islamic. He receives dozens of appeals for foreign aid each year, says Gaddafi, and he judges them all on two criteria: Will the loan help Islam, and will it hurt Israel?
This kind of bravura would not be possible without the billions of barrels of oil that lie beneath the region's sands. Gaddafi and the other oil-rich Arabs have exploited their resources with a shrewd combination of cooperation and militancy. Under the auspices of the Organization of Petroleum Exporting Countries (OPEC), founded by Iran, Venezuela and Saudi Arabia in 1960 to fight a reduction in prices by the oil companies, the eleven major petroleum-producing countries have increased prices 72% since 1970. Last week in Beirut they demanded further compensation to cover the recent erosion of the dollar and pound sterling. Lest the oil consumers unite against them, moreover, the OPEC conference declared ominously that such action "could have negative effects," i.e., a boycott.
Other Sources. Money is not the only issue, however. In Saudi Arabia, the shrewd Minister of Oil and Mineral Wealth, Ahmed Zaki Yamani, negotiated a new policy of "participation" by his government's oil agency, Petromin. Within three years, Petromin will acquire a 25% share in Aramco, the huge producing company through which Exxon, Texaco, Standard Oil of California and Mobil have been pumping Saudi Arabian oil. By 1983, the Saudis' share of Aramco will have increased to 51%. Similar deals have been made by other Middle East producers. Last week, the government of Iran took over the operations of a consortium of American, British, French and Dutch producing companies.
For the U.S., the sharp rise in prices and the increase in Arab ownership come at a time when the nation's reliance on oil from the Middle East is expected to increase dramatically: from 7% of total U.S. consumption today to as much as 50% by the 1980s. President Nixon is said to be convinced, however, that the U.S. must not allow itself to become so dependent on such a distant and unstable region. In his forthcoming message to Congress on the energy crisis, he is expected to ask for funds to develop other sources of energy--coal, shale-oil deposits, chemical substitutes and solar and atomic power--in a hurry. "The time to start worrying about Arab blackmail," says one veteran of the Middle Eastern oil business, "is when the Arabs tell you not to worry about blackmail."
The big question, now and in the future, is just what the Arabs are going to do with their new-found riches. A few still buy the traditional perks--air-conditioned Cadillacs, swimming pools and girls--but others have hired squads of advisers, ranging from ex-British civil servants to Palestinian refugees, to help them build roads, hospitals, housing projects, and to invest their money in Western enterprises for maximum profit. The Kuwaitis still seem to favor foreign real estate--from a new high-rise Holiday Inn in Beirut to a $27 million chunk of the Champs-Elysees, where a palatial House of Kuwait is to be built. The Saudis are determined to build or buy their own "downstream" facilities--which, in the language of the oilmen, means oil refineries and even chains of service stations in Western Europe and the U.S. They also have plans for an ambitious program of industrialization at home. And they emphasize that they would welcome U.S. participation. Minister Yamani, in fact, envisions an economic partnership between the U.S. and the Arab states so strong that it might eventually alter U.S. foreign policy on the Middle East. "If you have close economic relations," he told TIME Correspondent Spencer Davidson last week, "you can rely on each other. It is much better than fighting and confrontation."
Such a view contrasts sharply with that of the militant Gaddafi, whose tastes are spartan and anti-imperialist. The son of a nomadic horse and camel trader, he lived in a tent throughout his childhood. With the help of a tutor, he studied at night by the light of an oil lamp, and he remains fiercely proud that he skipped several grades after entering school. He traces his political consciousness to the late 1950s. "Everything was happening," he says. "Arab nationalism was exploding. The Suez Canal had been nationalized by the Egyptians in 1956; Algeria was fighting for its independence. The monarchy had been overthrown in Iraq. In Libya, nothing was happening. We had only a simple old King, a fool of a crown prince and a corrupt government."
Once, he recalls, he organized his fellow high school students and led a demonstration for Nasser. "I went around to all the different merchants for cloth for the flags and banners and wrote slogans on all the walls. I always dressed in Bedouin robes with my face covered, so that when the police came looking for me, they would always be told that I was just another nomad."
Rebels. He went on to Libya's military academy, where he gradually won over his classmates to the cause of revolution--and each class revolutionized its successors. Says Gaddafi: "We decided that we could make the revolution when we got half the officers in the Libyan army. By 1969 we had them." The opportunity came on the night of Sept. 1, as the army officers were playing host to the senior officers of the national police, who were loyal to King Idris. As the evening drew to a close, the young officers simply arrested their guests. The 80-year-old King was out of the country as usual, and the crown prince slept through two raids on the palace. By 7 a.m., the rebels held Tripoli, and Muammar Gaddafi was Libya's new head of state and commander in chief.
The former Italian colony was, and for the most part still is, a vast desert, more than three times the size of France but inhabited by fewer than 2,000,000 people. Their chief exports consisted of camels, dates and scrap metal from the battle wreckage of World War II. Their per capita income: $50 a year. But underneath the desert, undiscovered until the late 1950s, lay the oil that would fuel Gaddafi's ambitions for Libya.
As chairman of a twelve-man Revolutionary Command Council, Gaddafi has given his country his own special brand of nationalist revolution. He quickly ousted the Americans and British from their Libyan airbases, but he has also been consistently anti-Soviet. He expelled not only the 25,000 descendants of Italian colonialists who were still living in Libya but also threatened to ship home 21,000 Italian bodies that had been buried there over the years. He ordered that all signs and documents be written only in Arabic.
Gaddafi's nationalism and puritanism color all aspects of life. Foreigners arriving in Libya are sometimes refused entry because their passports have not been translated into Arabic. Immigration men once turned back an entire Italian circus, complete with animals, for this reason. A non-smoker and nondrinker in the strictest Moslem manner, Gaddafi closed all nightclubs, bars and casinos. Last fall he restored the practice of amputations for thievery, in accordance with Koranic law--loss of the right hand for mere theft and the left foot as well for armed robbery.
Such gestures may seem absurd to foreigners, but Gaddafi justifies them as a return to Islamic principles of old. "When we do these things," he says, "we purge ourselves of impurity that is a product of imperialism and return to the true values of Islam." Gaddafi still lives in a barren two-room apartment at the Aziziya army barracks with his second wife Safiya, a former nurse whom he met two years ago while he was recovering from an automobile accident. She has presented him with a son, whom he named Seif al-Islam (sword of Islam), and is expecting a second child. Gaddafi's father lives in a shack in one of Tripoli's slums, and Gaddafi has vowed that "he will be the last to have a house," meaning that everyone else must be properly housed before his own family. Gaddafi expects his colleagues--whom he addresses as "Brother"--to live in a similar fashion. When Prime Minister Abdul Salam Jalloud moved from a spare apartment into a villa in Tripoli, Gaddafi ordered Jalloud's furniture moved back to the apartment. Jalloud got the message and abandoned the villa.
Test. In the manner of Harun al-Rashid, the Arab caliph who ruled Baghdad in the 8th century, Gaddafi sometimes disguises himself in Bedouin robes and roams the city at night to see if his people are behaving properly. One time he appeared at Tripoli's Central Hospital and, to test the institution's efficiency, pretended that his father desperately needed a doctor. When a Taiwanese medic blithely suggested that a few aspirin would suffice, Gaddafi stripped off his robe and denounced the doctor: "You will regret that decision all your life." The doctor was fired.
To carry out the duties of six top jobs, Gaddafi works up to 20 hours a day. Occasionally he disappears for days at a time--to meditate in the desert, his friends say. When he addresses his people, he sometimes speaks for four or five hours at a stretch, his voice bursting with urgency. "Don't believe anything I don't tell you; I will tell you everything; we should have faith together!" he may cry. The crowd replies: "With our spirit, our blood, our religion, we will fight at your side, O Gaddafi!"
Gaddafi takes most of his ideas from the Koran. He still presents a copy of the holy book to official visitors. To the Ambassador from Czechoslovakia, he once remarked, "You cannot read this. You cannot comprehend it. But keep it by your side. It may help you to ask some questions." The Koran explains Gaddafi's loathing of drink: "With God's help I will stamp out alcohol in Libya, just as Mao stamped out another evil, opium, in China."
For all his fanaticism, Gaddafi is doing the best he can to bring development to his poverty-ridden country. After a visit to Libya last week, his fourth in seven years, TIME Correspondent Lee Griggs reported: "I've never seen Tripoli port as crammed as it is today. Modest but modern housing is going up everywhere. Yet, on the 20-minute drive into town from the airport, the brand-new divided highway goes by acre after acre of makeshift shacks perched precariously on the windswept desert. But the new stress is on agriculture. Gaddafi the Bedouin, brought up to revere trees as a source of food and shade, has ordered a massive land-reclamation program to make 700,000 acres of desert arable. (Cost: $800 million.) His aim is to make Libya self-sufficient in food by 1975.
"To provide expertise, Gaddafi has had to turn to the foreigners he basically dislikes: Yugoslavs for a new port at Misurata; Italians for road building; Britons for a new airport at Tripoli; Egyptians to advise his ministries, run his courts and train his 22,000-man army; and, of course, Americans to pump oil. The Egyptians, who have always been arrogant and patronizing toward Libyans, are as unpopular as ever --and there are now 220,000 of them in the country. But nobody is as unpopular at the moment as the Americans. When a Libyan student asked Gaddafi this month why he did not throw the Americans out of Libya, the colonel replied, 'Nothing would please me more, but who else would pump the oil that we need? God damn America.' "
For all his charisma and wealth, Gaddafi cannot become the leader of the Arab world from a remote place like Libya. He must look to the neighboring land of Egypt. "Egypt is a country without a leader," he says. "I am a leader without a country." Accordingly, he has bought and bullied his way into the Arabs' first solid military and political alliances since the breakup of Nasser's United Arab Republic in 1961. Eighteen months ago, he got Egypt and Syria to join in a "Federation of Arab Republics" with Libya. Later this year he is set to join Libya with Egypt in a full-scale political merger. Egypt's Anwar Sadat, whom Gaddafi detests, will be the President, and Cairo will be the capital. But Muammar Gaddafi will be the bankroller, the resident fury and the heir apparent.
Strife. In his oratory, Gaddafi often betrays a sort of messianic despair. "The Arabs are engulfed in torpor and darkness," he told his people last year. "The Arabs have lost direction." What he might better have said is that the so-called "Arab nation"--that congeries of 24 republics, monarchies, sheikdoms and otherwise organized anomalies--is, as usual, in a state of fratricidal strife.
Kuwait and Iraq were engaged in border skirmishes last week over a stretch of Kuwaiti oil land that Iraq claims as its own; in fact, the Iraqis claim all of Kuwait, not only for its oil but also for its wider access to the Persian Gulf. Both Jordan's King Hussein and Sudan's President Jaafar Numeiry were troubled by the Palestinian Black September terrorists in their jails: Hussein decided to commute the death sentences of 16 guerrillas but to hold them in prison, while Numeiry proceeded with plans to try eight Black Septembrists for the murder of the American and Belgian diplomats last month.
By any standard, the Arabs seem hopelessly divided, ranging from the reactionary monarchy of Saudi Arabia's King Feisal to the quasi-Maoist regime of South Yemen. The extent of their differences can also be measured by their varying attitudes toward Israel. The military dictatorships of Libya and Iraq profess undying enmity for Israel and call for its extinction. The smaller states of Jordan and Lebanon, which border on Israeli power, favor a quick and peaceful resolution of differences. Egypt, under Anwar Sadat, agonizes over its past humiliations but has no wish to resume fighting, and this is largely true of Syria as well. Whatever their views, all the Arab regimes seem to share the same sense of anger and frustration about their common enemy.
The disillusionment now widespread in the Arab world is traced by some scholars to the false hopes raised by Gamal Abdel Nasser in the late 1950s and early 1960s. All Arabists agree that the Six-Day War of 1967 was a pivotal event in the history of the region. Says Shimon Shamir, Arab specialist at the Shiloah Institute in Tel Aviv: "The conflict with--and defeat by --Israel was a microcosm of the whole Arab experience with the West." He means that ever since the Renaissance, the whole power of Arab ideology, or political Islam, has been in conflict with the power of Western technology and political capitalism--and that the Arabs have lost in nearly every conflict.
Despair. Small wonder then that Gaddafi romanticizes a return to an Islamic purity of the past, or that his call brings forth such emotion from his audiences. He looks back to the 8th century, when Arab power extended from Persia to southern France, and concludes that the Western governments have used Israel to divide and subvert the Arab nation. This kind of romanticism can lead, however, to a new cycle of despair. As Arnold Hottinger, a Swiss expert on Arab affairs, has written, "Radical discontent with the political situation as it is can lead to a fixation on goals incapable of attainment. And the ensuing frustration due to unfulfilled aims can lead in turn to the establishment of even more 'revolutionary' goals, even less susceptible of attainment."
The crisis with Israel thus remains at a stalemate. The Israelis are determined not to give up Jerusalem or such strategic positions as the Golan Heights on the Syrian border or Sharm-el-Sheikh at the opening of the Gulf of Aqaba. The Arabs insist that they will settle for nothing less than the restoration of the territory they lost in 1967.
The moment would seem to be ripe for dramatic diplomatic initiatives, but none have been made. The United Nations peace mission undertaken by Swedish Ambassador to the Soviet Union Gunnar Jarring has ended in utter failure. The Soviets, having been invited by Sadat to withdraw their formidable military presence from Egypt last year, are remaining relatively aloof from the scene. That leaves the U.S. as the only peacemaker in sight, but so far the Nixon Administration has failed to come up with any fresh ideas.
The U.S. still believes that the first step should be an interim settlement allowing the reopening of the Suez Canal; this would be followed by negotiations toward an overall settlement. But Egypt maintains that "proximity" talks--in which Egyptian and Israeli teams would position themselves in separate rooms of the same building, with an American mediator running back and forth between them--can only take place if the Israelis will first give an assurance that they will withdraw to the pre-1967 borders. The Israelis reply that they are not going to assure any withdrawing in advance of negotiations.
The Israelis can afford to delay, and the Arabs cannot bring themselves to do otherwise. Even the Arabs' hopes for the Palestinian fedayeen as a force that could break the impasse have faded, although, as one U.S. diplomat observes, "We will have the terrorist problem in the Middle East as long as the Palestinian problem is not solved." Of particular concern is the uncontrollable Black September group, which some fedayeen leaders in Beirut describe as "not an organization but a state of mind." They mean that various groups of fedayeen who become disgruntled may temporarily declare themselves members of Black September, then venture forth to violence, be it the kidnaping of Israeli athletes in Munich or the killing of Western diplomats in Sudan.
To Muammar Gaddafi, the only hope lies in Arab unity, and he has gained an influential ally in Mohammed Hassanein Heikal, Nasser's old friend and policymaker and the editor of the Cairo newspaper Al Ahram. Heikal, who is somewhat estranged from Sadat but sees Gaddafi as a new force in Arab politics, takes considerable hope in the forthcoming Egyptian-Libyan federation. He believes that the new alliance will be strong enough to exert pressure, via the conservative Arab states and the U.S., to make Israel withdraw from the occupied territories.
But the most important new element in the Arab world--for the Arabs themselves, for the Israelis and for all the industrialized nations--is the revolution being wrought by oil. Exactly what political changes will accompany this phenomenon cannot be predicted, though Arnold Hottinger believes that the more populous "frontline" states like Egypt will use every possible means--including subverting the conservative, oil-rich regimes--to see that a good share of the oil revenue is channeled into the struggle against Israel. "They would attempt," Hottinger speculates, "to evolve an oil policy designed to punish the friends of Israel and to benefit the friends of the Arabs, who in that case would almost certainly include most or all of the Communist world."
Whether the Arab states could effectively punish the Western powers by such means is widely disputed. But it is clear that the revolution in oil, while it could provide the Arab nations with an Aladdin's lamp of riches for development, can also increase the volatility of a historically unstable region. Its advent makes even more urgent the need for a break in the impasse.
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