The Oil Producers Feel A Money Squeeze

The dizzying series of oil-price hikes begun by OPEC in late 1973 led to widespread speculation that the cartel's members would eventually soak up a disruptively large share of the monetary reserves of the non-Communist world. But these forebodings could not take into account the world recession that has slashed oil demand. Today OPEC'S output is running at about 28 million bbl. per day, v. 33 million bbl. just before the 1973 embargo, and revenues are falling below expectations.

A few OPEC states, notably Saudi Arabia and Kuwait, are still taking in more money than they can spend. But at least four member countries--Venezuela, Algeria, Iran and Iraq--are expected to have to borrow up to $2 billion in international money markets this year. Little more than a year ago, they were wallowing in surplus cash. A sampler of conditions in key producing states:

IRAN: Oil revenues have fallen from $20 billion last year to $16 billion in 1975, forcing the government to cut spending on roads, urban and rural development programs and other projects. Gray royal caviar has disappeared from the menus of some ministry luncheons, and the guest lists at glittering state dinners have been cut in half. But the military remains untouched; it received $11.8 billion this year, and recently bought 80 U.S. F-14 fighters.

VENEZUELA: Speeded-up nationalization of foreign oil companies has not helped to hold revenues up. The government has peeled $1.9 billion from next year's budget, reducing it to $7.7 billion. Moreover, the government will make no contribution next year to the Venezuelan Investment Fund, a state-operated venture that funnels capital into such projects as shipbuilding. Last year the fund received $3 billion. But austerity has its limits: President Carlos Andres Perez has just ordered a new presidential jet costing $12 million.

ECUADOR: Failing in a move to charge prices even higher than the rest of OPEC, the country suddenly found itself losing $20 million a month in foreign currency. The government slapped a 60% tax on luxury imports, such as automobiles; the levy has been so unpopular that it helped spur on plotters who attempted a coup against President Guillermo Rodriguez Lara a month ago.

ALGERIA: The crimp in oil revenues is expected to force Algeria to borrow up to $1 billion abroad this year. Even so, its industrialization program is falling well behind schedule.

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