HOW QADDAFI RAISED THE PRICE OF OIL

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00965R000706940059-5
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 22, 2016
• Document Release Date: November 13, 2012
• Sequence Number: 59
• Publication Date: May 4, 1986
• Content Type: OPEN SOURCE

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Declassified in Part - Sanitized Copy Approved for Release 2012/11/13: CIA-RDP90-00965R000706940059-5
rVA3111iN 1UN YU~j'
'`yF'~3E 4 MIay 1986
Jack Anderson and Dale Van Atta
How Qaddafi Raised the Price of 0i1
The story can now be told how Libya's
Muammar Qaddafi backed down the oil com-
panies and pushed -up oil prices in the early
1970s, thus kicking off the process that was
to unravel the economy of the Western
world.
There is irony today in the story. For fall-
ing oil prices have knocked the economic
props out from under Qaddafi. Oil constitutes
99 percent of Libya's exports. With oil in-
come down by more than half, there's no
longer enough money to finance all of Qadda-
fi's schemes. So the Libyan people, pinched
by shortages, are beginning to blame him for
squandering their oil inheritance.
From the day Qaddafi seized power in
Libya, his revolutionary goal was to lay hands
on the properties of the oil companies. In
those days oil-producing countries saw higher
revenue as a function of higher production.
But not Qaddafi. He convened Libya's 21
foreign oil producers on Jan. 20, 1970. His
message, conveyed as much by a stern, per-
emptory demeanor as his words, was that
things were to be different.
This time the corporations were con-
fronted not by soft princes wheedling for
higher production quotas but by lean revolu-
tionaries who threatened to stop all prod-
uction. Qaddafi was willing to risk all, he said,
and would confidently pit the Arab people's
capacity to endure the loss of necessities
against the oilmen's stomach for forgoing lux-
uries.
There was a cryptic, scriptural roll to his
message that was impressive and forbidding.
"People who have lived for 5,000 years with-
out petroleum are able to live without it even
for scores of years longer to reach their le-
gitimate right," he said.
At the time of the Qaddafi revolution,
there was pending before then-president
Richard Nixon an offer, indeed an importun-
ing, from the shah of Iran to sell the United
States one million barrels a day of Iranian oil
for 10 years at the fixed price of $1 a barrel
-about 40 percent of the price Qaddafi de-
manded.
Qaddafi had to be forceful enough to wring
epic concessions from the oil companies with,
out crossing the invisible tripwire that would
rouse the consuming nations into the kind of
mobilization that only two years earlier had
routed the combined Arab states.
Qaddafi's tactics, audacious in their total-
ity, were succession of testing probes, of re-
tractable bluffs, of muted confrontations, of
small penetrations of selected weak points,
with a pause every step of the way to take
the pulse of resistance. He would resume
only when no counterattack surfaced,
becoming truly bold only in the eighth month
of the campaign after a dozen tests had
shown that there never would be a counter-
attack.
Besides the failure of the oil community to
rise to any response to Qaddafi's campaign,
there were also exhibitions of noncombative-
ness in Washington. Thus the desert dictator,
unloved even by most of the Arab oil world and
vulnerable to boarding parties from the U.S.
Sixth Fleet, thumbed his nose at the Western
powers and launched the upward spiral of oil
prices.
How did this desert tribesman succeed in
defying the international oil industry in the face
of inauspicious world market conditions? A hint
is contained in intelligence reports that identify
the financial f eehmter RnMrt V~
cret adviser to Qaddafi. Vesco was then on the
lam from the U.S. Justice Department and ac-
cording to the intelligence reports slipped into
Libya frequently to consult with Qaddafi.
c.1986. United Feature Syndicate
Declassified in Part - Sanitized Copy Approved for Release 2012/11/13: CIA-RDP90-00965R000706940059-5