THE CARTEL THAT NEVER WAS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00806R000200870004-0
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 22, 2016
• Document Release Date: July 14, 2010
• Sequence Number: 4
• Publication Date: March 1, 1983
• Content Type: OPEN SOURCE

Sanitized Copy Approved for Release 2010/07/14: CIA-RDP90-00806R000200870004-0
STAT
t1I1 PAGE,
ATLANTIC MONTHLY
MARCH 1983
Saudi Arabia finds in the perceived unity a power
of OPEC a convenient illusion
THE CARTEL THAT NEVER WAS
BY EDWARD JAY EPsTEIN
0 PEC, WHICH STANDS FOR THE ORGANIZATION OF PE-
troleum Exporting Countries, is a four-letter word
synonymous with prodigious wealth, arbitrary
power, and fear. The wealth is from the combined oil sales
of its thirteen member nations, which exceeded $240 bil-
lion in 1981-a sum greater than half of the entire M-1
money supply in the United States; the power from the
fact that its members control nearly two thirds of the free
world's oil reserves; and the fear from the threat that
OPEC might cut of this lifeline of energy, paralyzing the
world's economy. Sixteen industrial nations, led by the
United States, banded together in 1974 to create an orga-
nization known as the International Energy Agency,
which, in the event of a dreaded OPEC cutoff, would ra-
tion the remaining supply of oil among the industrialized
nations. OPEC was taken so seriously that in 1979 Presi-
,
dent Jimmy Carter specifically blamed OPEC for both the Venezuela requires all the revenue from its present pro-
recession and inflation, and there were even hints from
Henry Kissinger of American military actions against
OPEC. Indeed, no other organization, with the possible
exception of the first Communist Internationale, has ex-
cited such fears on a global scale.
The continued preoccupation with the potential threat of
OPEC, however, distracted attention from the actual
flesh-and-blood organization that inspired it. Despite a
booming voice that has reverberated through the world's
media for the past decade, it turns out that OPEC is an
astoundingly small organization. Its headquarters, in Vi-
enna, is its. only office: there are no branches or represen-
tatives elsewhere. Except for the alert squad of Austrian
"Cobra" commandos with submachine guns guarding the
entranceway, the four-story building at Donaustrasse 93 in
downtown Vienna resembles any other modern office
building in Europe. It is built of gray marble and glass,
with a small parking lot in front, and almost identical
buildings on either side, housing IBM and an Austrian
bank. In 1982, twenty-two years after it was founded,
OPEC employed only thirty-nine persons-all men-on
its executive staff. Not counting a few dozen Austrian sec-
reta-^_es and clerks and a handful of employees of OPEC's
Fund for International Development (which awards grants
and other largesse to countries in the Third World), this
staff of thirty-nine men constituted the entire worldwide
employment of OPEC. It included everyone from the sec-
retary general to the press officers.
DESPITE THE MYTH THAT OPEC STATES DO NOT
need the oil revenues they receive, a secret 1982
CIA analysis showed that they would have a mini-
mum balance-of-trade deficit of $17 billion last year and
$25 billion this year. When the economic situation of the
individual members is considered, it emerges that only a
few have any real room to reduce production without caus-
ing financial calamity for themselves.
The members of OPEC fall into two distinct groups. The
first is the nine most populous countries, who desperately
need every dollar of oil income they can get. For example
duction of 2.3 million barrels a day just to pay the multi-
billion-dollar interest on its foreign debt. Ecuador, which is
in even worse financial straits, at full capacity cannot pay
its debt charges this year and has been forced into virtual
bankruptcy. Nigeria, which imports more than $1 billion
worth of goods each month, cannot further reduce oil pro-
duction without depriving its population of food and other
necessities. Gabon, the other Black African member of
OPEC, is in a similar financial bind. Algeria, which has a
$17.5 billion foreign debt, and Indonesia, which has a $26
billion foreign debt, are almost entirely dependent on oil
revenues to avoid defaults. Libya, once a cash-rich nation,
recently announced that it will have to continue to produce
at least twice its "quota" in order to avoid bankruptcy. Fi-
nally, Iran and Iraq, locked in an expensive war, need their
oil revenues to pay for arms and ammunition.
CGi
Sanitized Copy Approved for Release 2010/07/14: CIA-RDP90-00806R000200870004-0