Courting Billions

It was the reddest of red carpets that the French rolled out last week for a state visit by Iran's Shah Mohammed Riza Pahlevi and his Empress Farah. The entire French Cabinet lined up at Orly Airport to welcome the Shah. President Valery Giscard d'Estaing skipped the NATO summit in Brussels to welcome the Iranian leader, who was feted at Versailles' Hall of Mirrors with fireworks and dances. At week's end the wooing appeared well worth the effort: Iran agreed to purchase $5 billion in industrial equipment and technology from France in the next decade.

The French have promised to sell the Shah five complete nuclear power plants (price: about $1.2 billion). The French also agreed to construct a subway in Teheran costing at least $600 million, a liquefied natural gas plant ($600 million), and a steel plant. They will construct twelve large tankers and help with a large-bore gas pipe line ($1.7 billion) and supply sophisticated military equipment. In return, the Shah has agreed to deposit $1 billion in the French central bank as an advance payment and increase Iran's shipments of oil to France. The advance payment will help the French narrow their trade deficit, which for the first five months this year was $1.8 billion.

Paris turned euphoric after the agreement was announced. The franc rallied in international trading and stocks rose on the Paris Bourse. French Finance Minister Jean-Pierre Fourcade boasted that the deal would mean "fabulous sums of money for our industry." The agreement, however, is bound to disturb other nations. Washington had been urging Western industrial nations to work together in arranging deals with the oil producers rather than proceed bilaterally. Moreover, the sale of nuclear technology does not appear to be limited by strict safeguards against Iran's developing atomic weapons. Thus other Persian Gulf countries, which already fear the Shah's growing military power, are certain to be made even more uneasy by the deal.

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