America, the Gulf, and the West

Most commentators, and many policymakers, blithely assume that when the crisis is over, the problem will be over. That requires great faith in the power of foxes to guard chicken coops.

Twenty years ago, on the eve of Britain’s relinquishment of the maritime protectorate of the Gulf which she had exercised for the preceding century and a half, the Western oil companies prepared to do battle at Teheran with the Gulf members of the Organization of Petroleum Exporting Countries (OPEC) in what was to be the most critical engagement ever fought in the history of the Middle Eastern oil industry. At stake was a fundamental issue of supreme importance: whether crude-petroleum prices and production levels were to continue to be governed by freely negotiated contracts between the companies and the governments of the producing countries, or whether prices and output were henceforth to be arbitrarily determined by the OPEC cartel. It might even be said that the confrontation represented a contest between two philosophies of law: that of the West, in which the law of contract plays a crucial role, and Muslim jurisprudence, which, in accordance with the tradition of Oriental despotism, depends upon the promulgation of edicts.

JK

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J. B. Kelly

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Most commentators, and many policymakers, blithely assume that when the crisis is over, the problem will be over. That requires great faith in the power of foxes to guard chicken coops.

Twenty years ago, on the eve of Britain’s relinquishment of the maritime protectorate of the Gulf which she had exercised for the preceding century and a half, the Western oil companies prepared to do battle at Teheran with the Gulf members of the Organization of Petroleum Exporting Countries (OPEC) in what was to be the most critical engagement ever fought in the history of the Middle Eastern oil industry. At stake was a fundamental issue of supreme importance: whether crude-petroleum prices and production levels were to continue to be governed by freely negotiated contracts between the companies and the governments of the producing countries, or whether prices and output were henceforth to be arbitrarily determined by the OPEC cartel. It might even be said that the confrontation represented a contest between two philosophies of law: that of the West, in which the law of contract plays a crucial role, and Muslim jurisprudence, which, in accordance with the tradition of Oriental despotism, depends upon the promulgation of edicts.