The Arabs' Final Weapon

"Oil and politics don't mix," Saudi Arabia's King Feisal once proclaimed, brusquely rebuffing arguments that he should cut off oil to nations that supported Israel. In the energy-crisis years of the '70s, however, oil and politics not only mix; they form an entirely new --and dangerously explosive--element in the equation of world power. That reality was made all too plain last week by Feisal himself. Speaking more strongly than ever before, he very clearly warned the U.S. that its support of Israel might be at the price of Saudi oil --oil that the U.S. will desperately need in the decade ahead.

"Other Measures." Coming from an Arab conservative who has always been considered one of America's good friends, Feisal's words were, despite their restrained tone, particularly chilling. "As friends of the U.S. and in the interest of maintaining and cementing this friendship," he said in an interview with NBC, "we counsel the U.S. to change its one-sided policy of favoritism to Zionism and support against the Arabs. We are deeply concerned that if the U.S.

does not change its policy, it will affect our relations with our American friends [and] place us in an untenable position in the Arab world. I want to draw the attention of my American friends to this serious situation so that we would not reach the point where we would be compelled to take other measures."

Those "other measures" would almost certainly not involve a complete closing of the Saudi oil spigot. More probably, Saudi Arabia might limit the expansion of oil production that the U.S. has counted on to fill its future needs. Under plans announced last year, the Saudis had promised to boost production from 8,000,000 bbl. a day to 20 million by 1980 (U.S. oil production, by contrast, is expected to remain at 12 million bbl. per day). So great is the world's thirst for oil--consumption will more than double during this decade--that a decision by Saudi Arabia to allow only modest expansion might affect economic growth in the West.

As if Feisal's words were not warning enough, Libya took another in a long series of actions designed to gain control of its oil. The regime decreed that Libya would nationalize 51 %--enough for full control--of five major oil companies operating in the country, including properties owned by Exxon, Mobil, Texaco, Socal and Shell. The Libyan government also declared that the companies must raise the price of oil from $4.90 to $6 a barrel. If the oil companies give in to Libya, they may be forced to make similar deals with oil nations in the Persian Gulf.

Oil, the chief fuel of the West, would become even more expensive, and inflation would be given still another boost.

The Nixon Administration, which has been accused by critics of being almost oblivious to the energy crunch until recently, is now aware of the dangers ahead. At his White House news conference last week, President Nixon indirectly responded to Feisal's warning by saying that he was giving "highest priority" to a settlement of the Arab-Israeli conflict. In a tone that Tel Aviv could scarcely welcome, he evenhandedly blamed both sides: "Israel simply can't wait for the dust to settle, and the Arabs can't wait for the dust to settle in the Mideast. Both sides are at fault. Both sides need to start negotiating. That is our position. We're not pro-Israel, and we're not any more pro-Arab because they have the oil and Israel hasn't."

The President went on to warn the Arabs that if they continued their threats, they might find, as Iran did two decades ago, that their buyers had decided to go to friendlier sellers. "Oil without a market," said Nixon, "as Mr. Mossadegh* learned many, many years ago, doesn't do a country much good. The inevitable result [of Arab pressure] is that they will lose their markets, and other sources will be developed." Later in the week, searching for those new sources, Nixon urged Congress to act on already pending measures that would, among other things, permit construction of a pipeline for Alaskan oil. He also said the Government would step up the use of atomic energy and would try to find ways of extracting coal without being "too destructive" to the environment.

The harsh fact is, however, that there are no other sources immediately available. Through an accident of geography, the Arab nations sit on 55% of the world's proved oil reserves. Until four years ago, the U.S., which has 5 1/2% of the world's proved reserves, had so much oil that it could export its excess. But consumption, which is growing at a rate of about 7 1/2% a year, has leaped past domestic production. Only last week Washington warned that there will be a serious shortage of heating oil this winter.

In 1970 the U.S. got only 16% of its crude oil from outside the country; in the first half of 1973 it got 23.5%. By 1980 it is estimated that the nation will get 39% of its oil from overseas. Even after a pipeline is approved, oil from the North Slope of Alaska will not be available for at least five years. Venezuela, long a major exporter, is running low on reserves. Canada has warned that it, too, might not be counted on for oil. Prime Minister Pierre Elliott Trudeau last week announced plans to divert some 500,000 bbl. per day of Canadian oil from the American Midwest to Quebec and Eastern Canada. An alternative solution to the crisis would, of course, be for the U.S. to reduce consumption to the level of domestic production, but it is doubtful that Americans would cooperate.

Already the politics of oil has changed the equation of power within the Arab world. For the first time, Feisal is in a position to assume the mantle of leadership. Pressed by radicals like Libya's Strong Man Muammar Gaddafi, and deeply resentful of Israel's occupation of Arab lands and Islam's holy places, Feisal, 69, is believed to feel that circumstances are now favorable for a new move against Israel. He has already given Egypt $600 million from his own coffers, mostly for arms and commodities; he has leaned on his neighbors, Abu Dhabi and Qatar, to chip in $600 million more. Now he is using his influence with the U.S. "Oil," says one Beirut analyst, "is the final weapon."

Softening the Hard Line. The Israelis claim to be unconcerned about Feisal's warning. "Only good can come to Israel from these threats," says an Israeli official. "We wait smiling for the boomerang to come back. Oil is too important to the U.S. for it to submit to blackmail. As soon as you give in to one demand, you will be blackmailed on every subject." Translation: the U.S. will become so angry that it will find other supplies of oil, and support Israel even more strongly.

There is, in fact, no thought in Washington of abandoning Israel: the Administration has concluded an agreement to send Israel 48 more Phantom jets and 36 more Skyhawks over the next four years, thereby ensuring Israel's air superiority in the Middle East.

There will, however, be much more American pressure on the Israelis to make greater efforts toward reaching a peace settlement. The oil crisis may lessen the traditional power of the Israeli lobby in the U.S., State Department analysts believe. In fact, Henry Kissinger, the first Jewish Secretary of State, may be in a better position than his predecessors to modify unwavering American support for Israel. The Israelis, according to this view, may thus be made to soften their current hard line toward the Arabs.

A Reasonable Man. In the long run, the Arab threats may backfire, especially if the U.S. buckles down and actively tries to conserve energy and to develop altogether new sources. The U.S. has vast supplies of oil tied up in shale deposits and there is, presumably, America's inexhaustible technological ingenuity, which may finally be able to make atomic power safe and profitable and harness the power of the sun. "Once your great country gets off its ass and turns all its unemployed scientists loose, there won't be a problem," predicts a European spokesman for Shell Oil.

That will take years. Meanwhile the U.S. must find some other means of keeping the oil flowing. Fortunately, Feisal is a reasonable man. "We're damned lucky we're dealing with Feisal and not Venezuela, Libya, or Algeria," says Wanda Jablonski, publisher of Petroleum Intelligence Weekly and an astute observer of the oil scene. Talking with the King and with Israel's Golda Meir will undoubtedly be near the top of Henry Kissinger's agenda as Secretary of State. For some time to come, however, the U.S. must face a disturbing fact of life: There is a new game in the Middle East, and the Arabs hold most of the cards.

* Referring to Iran's late, mercurial Prime Minister Mohammed Mossadegh, who in 1951 nationalized British oil interests in his country. In retaliation, the oil companies organized a boycott against Iranian petroleum. Within two years it proved so successful that with Iran's economy on the verge of collapse, Mossadegh was deposed, and Iran and the oil companies reached a compromise.

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