BRITAIN PLANS OIL DEAL

Press, Volume CXIV, Issue 33434, 16 January 1974, Page 13

BRITAIN PLANS OIL DEAL

(N.Z.P.A.-Reuter—Copyright) LONDON, January 15.

Britain has put proposals to Iran for a multi-million-pound deal for supplying commodities in return for crude oil, and is awaiting the Teheran authorities’ response.

An informed official source in London said today that the package proposals were made during recent talks in Teheran between a British delegation of Ministerial officials and business representatives and officials of the Iranian Ministry of Economic Affairs.

The British proposals envisage a deal of between £loom and £lsom during 1974. In return for crude oil, Britain is offering materials such as steel, cement, rubber, paper, and textile fibres. Britain wants the proposed deal to be in addition to the present imports of Iranian oil into Britain and other BritishIranian trade. Iran is a big exporter of oil to Britain: during 1972, total Iranian exports to Britain amounted to about £l24m, while exports and re-exports from Britain were about £ll7m.

Britain has been exploring the possibility of a long-term barter deal with Saudi Arabia in which Britain would supply industrial goods for the country’s economic development in return for oil. The British Government sees no

conflict of interest in exploring the situation on bilateral and multilateral levels. In a statement released just before he left Washington for Rome, the United States Secretary of the Treasury

(Mr George Schultz) said that the plight of developing countries affected by the oil crisis would be one of great concern to the world Finance Ministers meeting in the Italian capital this week. “The extra cash that the under-developed countries must pay for their oil may wipe out all the special aid advanced by other nations.” he said. Mr Shultz’s assistants said he believed that the developing countries must find so much more money that the wealthy Arab oil-producers would "have to grant huge “soft” loans—low interest, and very long term —to allow them to meet their energy bills. Mr Shultz said: “In Rome we will try to come to grips with the facts and the estimates, and then see what should be done.” He will attend a two-day meeting of the Committee of 20 Finance Ministers, opening on January 17, on world monetary reform. The policymaking group represents the 126 member-countries of the International Monetary Fund. The Arab oil embargo, coupled with a transformation in the world price of crude oil —up by more than 100 per cent in some cases—will overshadow the meeting. The most that can be expected from it now is that some progress may be made this year towards creating a highlevel I.M.F. policy .group which can move to meet currency crises threatening the world’s financial climate.

U.S. concern

Professor Alex Moeller, a former West German Finance Minister, said in Bonn yesterday that the aims of the Washington conference proposed by President Nixon were explained to him by Mr Schultz during a five-day visit to the United States last week.

“Mr Schultz told me that the United States expects to lose about SUS92OOm on her balance of payments this year, because of the oil shortage and oil-price rises,” Professor Moeller said. The United States Treasury now expects a balance of pay-

ments deficit for 4974 of about SUSSOOm, instead of an originally-forecast surplus of SUSB7OOm.

“The oil-producing countries, on the other hand, expected payments surpluses totalling SUS6S,BOOm, compared with an estimate, before the oil crisis, of $U512,500m.” Professor Moeller added that Mr Shultz had said that the United States was convinced that bilateral agreements between oil-producing and oil-consuming countries, such as the one France had made with Saudi Arabia in an arms-for-oil exchange were no solution. “These countries cannot elude the world-wide effects of the energy crisis,” Professor Moeller • quoted Mr Schultz as saying. "If we do not act in concert, then we have failed a decisive test for the continuing development of the world economy.”