"Middle East financiers are buying technology," reads an ad in Milan's Corriere della Sera. "Encounter with the Middle East!" cries a come-on in Paris' Le Monde. Another ad in London's staid Financial Times crooks an inviting finger: "The Middle East wants to do business with you."
Not half so much as Europe wants to do business with the Middle East. When the price of oil for the nine nations of the Common Market leaped by $25 billion a year ago, the Continent nearly panicked. Recycling petrodollars—that is, borrowing money back from the oil producers to buy yet more petroleum from them—was clearly a stopgap. Europeans soon realized that the only solution was to pay for the oil by selling more goods and services to the oil-exporting nations, but many economists were afraid that the mostly pre-industrial producing countries simply could not buy in sufficient volume.
To their happy surprise, the economists have been proved wrong. Italy's 1974 exports to Iran and the Arab countries rose 93%, France's 60%, Britain's 53% and West Germany's 85%. Total sales from Western Europe to all Arab nations, plus Iran, rose to an estimated minimum of $16 billion in 1974 from $10.6 billion in 1973, and seems sure to shoot up even more this year.
The effects are already showing up in Europe's accounts. Italy's trade deficit is expected to drop to $6 billion this year, compared with $10.7 billion in 1974; the nation no longer faces a threat of outright bankruptcy, as it did last fall. The French government estimates that its trade deficit will shrink from $3.7 billion in 1974 to $2.3 billion this year. Even sickly Britain is managing to reduce its huge trade deficits.
France so far is leading the export race, showing marked ability to sell "product-in-hand" plants—highly automated factories already functioning with trained personnel. Premier Jacques Chirac recently agreed in principle on more than $6 billion worth of contracts in Iran: a subway for Tehran, a steel mill, an auto assembly plant, a color television system and 200 housing units. In Iraq, he signed a similar $3 billion deal.
Fall Apart. The second-place West Germans are moving smoothly into the Middle East with an impressive mixture of direct exports and joint-venture projects. The Italians are third; they have built a reputation for handling vast projects more cheaply than either the French or the British, and with an outstanding technical flak. For example, in Bahrain, the Società Italiana Resine of Milan is completing a $12 million desalination plant that it says will be the largest in the world. During March the company and the Cairo daily Al Ahram jointly sponsored a conference on desalination that brought together representatives of nine Arab countries, Britain, France, West Germany, the U.S., Japan and Hong Kong.