IRAN: Oil, Grandeur and a Challenge to the West

  • Share
  • Read Later

(5 of 11)

What makes the Shah a key figure in the Middle East, some U.S. diplomats believe, is the fact that like Secretary of State Kissinger, he has managed to deal equably with both sides. He considers the Israelis arrogant and even "masochistic." But Iran nevertheless provides Israel with 50% of its oil. In return, Israeli experts on irrigation and land reclamation have transformed Iran's Ghazvin Plain into a fertile oasis. At the same time, the Shah responded favorably last October to a request from Saudi Arabia's King Faisal and dispatched six Iranian air force C-130 transports to ferry Saudi troops and equipment to the war against Israel. High on the agenda of Kissinger's talks with the Shah will be the unresolved confrontation between their two governments over rising oil and commodity prices.

Hard Words. The Shah, whose government will spend $1 billion this year to subsidize imports of meat, wheat, sugar and soybeans, insists that rising oil prices are no different than rising commodity prices. He seeks to tie the two together in an economic index that would help to limit further increases. The U.S. position is that oil is artificially priced, which the Shah himself admits, while agricultural increases are a response to free market conditions. President Ford, and Kissinger in his latest United Nations speech, abruptly cautioned the oil-producing nations not to price their product at disastrously high levels. The Shah, more accustomed to hand kissing than hard words, bristled. "Nobody can dictate to us," he told newsmen on a state visit to Australia and New Zealand. "Nobody can wave a finger at us because we will wave back." In his 90-minute interview with TIME (see box preceding page), the Shah warned, "If this is a serious policy of the U.S. Government, then on this subject we are going to have a very serious clash."

When the Shah talks about clashes these days, other nations sit up and take notice. Undeniably, Iran is becoming one of the world's major military powers. To equip his 160,000-man army, 40,000-man air force and 11,500-man navy, the Shah recently contracted for such imposingly modern weapons as 70 U.S. F-4 Phantom jets, 800 British Chieftain tanks and an assortment of destroyers, Hovercraft and troop-transport planes. In a deal that probably saved Long Island's Grumman Aircraft Corp. from bankruptcy, the Shah earlier this year ordered 80 F-14s at a cost of nearly $1.5 billion. By 1980 Iran will have more fighter-bombers (839) than any NATO nation except the U.S. The Shah, a skilled pilot with more than 5,000 flying hours in fixed-wing aircraft and helicopters to his credit, insisted on checking out the Phantoms personally.

  1. 1
  2. 2
  3. 3
  4. 4
  5. 5
  6. 6
  7. 7
  8. 8
  9. 9
  10. 10
  11. 11