The Art & Adventure of Bartering

The prospect of dealing with the oil-rich Middle East brings visions of a thousand and one kinds of profit to many a Western businessman. In reality, the visions often become vicissitudes. Take, for example, the case of the jet planes and the apples.

Eighteen months ago, the U.S.'s Douglas and Boeing companies were invited, along with British Aircraft Corp., to take part in what seemed to be a simple sales competition: the winner would sell three jets to Lebanon's Middle East Airlines under a contract that would return around $40 million. That is pretty small stuff to the aircraft industry, but the three new jets would presumably be only a starter; taken for granted was the fact that, along with, options on more planes for Middle East Airlines, the winning bidder would also sell jets to such smaller carriers as United Arab and Kuwait Airways. Besides, 20-year-old Middle East Airlines itself has become increasingly competitive, now flies from Beirut to Bombay, Zurich and Copenhagen, plans to go soon to Buenos Aires and Rio de Janeiro to serve a million Lebanese emigres in Latin America.

The catch was that to the Lebanese, business means bartering, and bartering is both an art and an adventure. So MEA's chairman, Sheik Najib Alamuddin, proposed to the British that his company would make partial payment for the jets in the form of surplus Lebanese apples; this would work out very nicely for the sheik, who is himself one of Lebanon's biggest apple-growers. The British, however, did not like them apples. Another idea--forming a British Aircraft Corp. subsidiary that would lease the planes to the Lebanese--was dashed last week when the British government revoked the kind of tax allowances that would make the subsidiary profitable.

With the British Aircraft Corp. forced out of the competition, Douglas and Boeing were left in the race, with Douglas having the inside track. Still, barter troubles continued. Now the Lebanese asked that surplus U.S. wheat and other foodstuffs be thrown into the deal along with the new jets. To help pay for the costly planes, the Lebanese proposed to raise cash by selling off the wheat and foodstuffs. If that sounded roundabout, it was--but it is the way business is apt to be done with the Middle East.

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