U.S. Warned Not to Rely on Saudi Arabia for Future Energy Needs

Two Tel Aviv University experts on the Middle East worned here against the reliance of the United States on the stability of the Saudi Arabian government for its future energy needs. The two were among American and Israeli participants in an all-day conference on “United States Energy Policy and its Implication for Israel and Saudi Arabia.” The conference was sponsored by the American Friends of Tel Aviv University and the World Jewish Congress and hosted by Edgar Bronfman, chairman of the WJC-North American Section.

The warnings came from Prof. Haim Shaked, director of the Tel Aviv University’s Shiloah Institute, and Maj. Gen. Aharon Yariv (ret.), director of the university’s Center for Strategic Studies. “While the Saudi record has been one of surprising stability thus far,” Shaked said, “we cannot on the basis of external and domestic factors, depend on the Saudis as a solid rock which will not be exposed to major changes.”

Yariv said that “Those in the Middle East who possess an American orientation look to the United States for credibility, but the developments in Iran are undermining this and upsetting the Saudis greatly.” He also warned that “instability in the Middle East is visible for a long time to come and militates against U.S. interests.” Yariv noted the U.S. “erroneously” believes that by resolving the Arab-Israel conflict with “heavy Israeli concessions will ipso facto resolve the regional stability.”

Prof. Uzi Arad, also of Tel Aviv University, declared that “the rapid rise in U.S. dependence on Arab oil from 31 percent in 1973 to 48 percent last year is a major contribution to the destabilization of the world energy situation.” At the same time, he noted, the U.S. has hardly any defense forces in the Persian Gulf and so its best course “is a reduction in dependence on Persian Gulfoil.”

SUGGESTED STEPS OUTLINED

The consensus of those at the meeting, according to Haim Ben-Shahar, president of Tel Aviv University and an economist, is that “the U.S. dollar will be strengthened and the power of the OPEC nations diminished only through the deregulation of fuel prices in the United States and the lessening of restrictions on the development of coal and nuclear energy.”

The meeting was held last Thursday before the Organization of Petroleum Exporting Countries decided to increase the price of crude oil by 14.5 percent. Alfred Kahn, chairman of the Council of Wage and Price Stability, the President’s chief inflation fighter, reacted to the hike by noting that the increase “complicates our whole anti-inflation plan” and “it’s harder to make a case for decontrol now.” The Administration has to decide soon whether to decontrol crude oil prices.

At Thursday’s meeting, Prof. Paul McAvoy of Yale University, who was an energy advisor to President Ford, said that with the limited decontrol now in effect, the rise in domestic output will be about three to five million barrels over the next five years which “will at best level our dependence on imported oil as the increase in demand for fuel drops to one-third the increase in the Gross National Product.”

MIT professors Robert S. Pindyck and Paul Jaskow said American Jewish organizations should support nuclear and coal energy despite ecological concerns. “There is a conflict in the American Jewish community whereby people recognize that current energy policy increases our dependence on Arab oil which is harmful to Israel, yet on the other hand traditional liberal tendencies render them reluctant to support policies which will lessen restrictions on nuclear energy and abolish current price controls,” Pindyck said.

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