An Iranian Answers Back

One of the most visible and vocal advocates of keeping oil prices high is Jamshid Amuzegar, Iran's shrewd and dapper Interior Minister. Amuzegar was chief negotiator for the producer countries in the 1971 settlement that first humbled Western oil companies by forcing costly price and tax boosts. Since then, he has become the Shah's right-hand oil expert. In an interview in Teheran last week with TIME Correspondents Karsten Pragerand William Stewart, Amuzegar talked forcefully on a range of topics.

OIL PRICES. If we had not taken the price action, the world would have continued to misuse and plunder oil, and 50 years from now there would have been a catastrophe. I fully agree that higher oil prices have slowed down the growth rate in the industrialized countries. But in my opinion this is in the best interests of the world. For instance, per capita income in the U.S. now is about $5,000. In Iran, before the oil price increase, it was $350 to $400. If we both have a 6% annual rate of growth, it would mean a $300 increase per capita in America and $24 in Iran. The gap widens. Would that not upset peace and stability?

INFLATION. In 1973, before the oil price increases, the average inflation rate reported by the Organization for Economic Cooperation and Development [OECD] was 12%; it is now about 14%. We admit that higher oil prices account for about 1/2% to 2%, depending on the country. One should not put all the blame on oil. What better scapegoat is there than OPEC and oil?

BALANCE OF PAYMENTS. The estimate for Iranian oil revenues this year is about $21 billion; by year's end we will have spent $16 billion on our five-year development plan, leaving total reserves of $5.9 billion in foreign exchange. If you add up all the reserves of OPEC members at the end of 1974, you may come to $45 billion to $50 billion. By comparison, one single country, Germany, stands there with enormous reserves [$33.4 billion at the end of August, according to the West German Bundesbank]. Yet they say that it is the oil producers who are going to end up with huge reserves of dollars and other hard currency.

ON FOREIGN AID. Our total commitment this year in various forms comes to more than $2.6 billion, which is about 10% of our G.N.P. At no time did the industrialized countries, even at the height of their prosperity, ever give more than an average of .4%.

ALTERNATIVE ENERGY SOURCES. A U.S. Senator told me that the oil price increase had helped West Virginia to start coal operations again, reopen the mines and reinstate thousands of jobs. He said, "Don't ever lower oil prices below those of alternative sources of energy." I want to know, are you Americans always going to think of Exxon and Texaco? What about West Virginia?

ON ECONOMIC SANCTIONS. I don't think we are vulnerable to them. Our requirements can be bought elsewhere. The French, for example, would be tickled to death if the U.S. embargoed weapons sales to us.

CONSERVATION. Oil is a noble product better used for purposes other than energy. We can produce some 70,000 petrochemical products--something we cannot do with nuclear, solar or geothermal energy. Let us believe in interdependence. We all live on one planet that has only 50 years of oil reserves but 400 years of coal and unlimited solar, tidal and geothermal energy. Iran's interests would be much better served if we left some extra oil underground.

SOLUTIONS. The way to avoid disruption is for frank dialogue between OECD countries and the producers. As the Shah said last year, we are ready to sit down, and if we are proved to be wrong, we will stand corrected. The first of our principles is that the price of oil should be equivalent to the cost of alternative sources of energy. Second, whatever the oil price, it should change with the rate of inflation in the industrialized countries in order to protect our purchasing power. Beyond that, there will be no geometric rise. We are even willing to tie the oil price to an index of 20 or 30 other commodities. We want to work with you. We are the last people to want to see the economies of the West go to pot.

This file is automatically generated by a robot program, so viewer discretion is required.