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PASTOR GENERAL'S REPORT, August 14, 1979
Page 9
The Defense Minister, M. Bourges, has been to Saudi Arabia, and President
Giscard de 'Estaing himself stopped off in the United Arab Emirates on his
way to tour French islands in the Pacific in July.
(Top West German offi
cials, such as Foreign Minister Genscher have also been journeying to the
Mideast capitals.)
The immediate result has been that France has been reassured about its oil
supplies. Iraq has promised to supply one-third of French needs. Three
quarters of these will now be met by three countries, the other two being
Saudi Arabia and the United Emirates.
But the French seem to have a far more encompassing scheme in mind. Accord
ing to the Daily Telegraph of August 1, 1979: "It is even suggested that
French leaders want a collective security pact in the Middle East under
European guarantees.- Strengthened by shared European and Arab disapproval
of America's wasteful oil policies, and by reticence about the American
sponsored separate Middle East peace, the diplomatic Quid pro quo would be
French--preferably European--sponsorship for� overailseITiement."
President Giscard has sold the rest of the EC on the idea of attending a
meeting with Persian Gulf producers, probably next month. The Arabs are
already talking about the concept of a 20-year energy co-operation agree
ment. And, reports the August 20 Business Week, United Arab Emirates Oil
Minister Mana Saeed al-Otaiba, (who is also-OPEC's president) said that
the talks "should not be limited to energy problems alone but should
include political and economic areas of common interest. The number one
political issue is, of course, Palestine. Says a West German official:
"It would be highly unlikely that the two groups would sit down and the
Palestinian issue did not come up."
If the Arabs and Europeans can strike a deal, it will further undercut
American influence in the Middle East. First of all, the scheme would
involve direct government-to-government supply contracts. This means that
both the Arabs and the Europeans will lessen their dependence on the big
U.S. oil companies.
The Arabs also feel the European connection could provide a way out of
their dilemma over the sinking value of the U.S. dollar. Reports the
Busi:_ness Week article� "Another strong bargaining chip for Europe is that
;.mder the European Monetary System (EMS) , dominated by the German mark,
more and more European currencies have become attractive alternative
investments for Arabs anxious to diversify out of the dollar. The dollar's
sharp decline has shaken Arab confidence in the U.S. economy as much as
the fall of the Shah of Iran and the Israeli-Egyptian peace treaty has
shaken their confidence in U.S. political and military leadership. 'The
Arabs have frequently talked of tying oil prices to a basket of currencies,
and I would imagine that they would want to discuss what role the EMS could
play if they should decide to cut loose from the dollar,' says an EC
official."
Arab interest in developing closer military ties with Europe is very logi
cal as well. The United States did nothing to prevent the Shah from top
pling from power in Iran. And it stood by while the Russians put a
Ccrnnmnist regime into power in Ethiopia. The idea of some sort of a "col
lective security" arrangement between the Arab producers and their most