The estate in Surrey, about an hour’s drive from London, is well hidden from the road. If you don’t know where to look, it’s easy to miss the big, heavy gates. And even if you do know where they are, they only open automatically when you’re expected.
Then, as your car pulls along the shrub-lined gravel driveway that winds a good distance up to the house, one or two bodyguards casually step out of the gatekeeper’s cottage just to make absolutely certain you are who you said you were.
It’s a Tudor, sixteenth-century mansion that the Yamanis bought it in 1978 for £500,000, fully restored to the period, then added a modern wing on to the rear.
There’s a vast diningroom with a huge open hearth, and a large livingroom that shows their preference for French furniture, and smaller rooms off the narrow, low-ceilinged hallway - a television room and a book-lined study where he has an antique desk and some antique chairs and a stack of papers waiting to be read.
But the place where he and Tammam and their children and their guests spend most of their time is at the end of the hallway in the new family room that’s something like their livingroom in Taif - a large open space with an indoor swimming pool. This is, they both believe, the most beautiful of all their homes.
Yamani is wearing an open-necked shirt, sitting on the couch next to Tammam, in front of the television set, with his daughter Mai and her husband and their children, and a collection of family friends. The video runs an American sit-com. Someone pours more tea and offers a plate of cakes. Everyone is talking to everyone else.
Except Yamani.
He’s fiddling with a small portable shortwave radio that he carries with him wherever he is in the world. First, he listens to the hourly news on the BBC World Service. Then he plays with the digital frequency selector to get the news in Arabic from the Middle East.
Once that’s over, he excuses himself to move into his study.
Now, leaning back in the chair behind his desk, with one foot propped up on a cushion, he talks about the subject that has been his life - oil.
“In most cases,” he says, “when anyone makes a forecast about the future, the present situation reflects itself in that forecast. When there’s a surplus in the market, you tend to see the future in that light. When there’s a shortage, it’s perhaps understandably difficult to talk about a surplus in the future without facing a barrage of disbelief.”
Putting the shortwave radio down, he toys with a silver- topped wooden cane.
“Sometime in mid-1978, I said that we did not think that we would ever face a shortage in the supply of oil. But the shortage in the supply of oil was with us by the end of 1978 because of a political event. In 1979, we thought that we would never see an over-supply situation, that there would never be a surplus in the supply of oil. And therefore when I said at the end of 1979 that there would be a surplus in the supply of oil, someone said that I was out of my mind. But just look what happened.”
He raises his eyebrows to make his point.
“So I think we should not be really so relaxed right now and think that we shall never again have a shortage in the supply of oil.”
These things are after all, he says, cyclical. There’s a natural cycle. In this case call it the petroleum variation of the corn-hog cycle. First you get a crisis. Then prices are posted up. Then you have a recession and a receding of demand and everyone says, oil glut. Then governments decide, we’ll never let it happen again. Subsequently, because there’s a glut, people get relaxed and demand builds up towards the capacity level and you set the stage for the next energy crisis.
The next energy crisis, he promises, is less than ten years away.
“There will be a shortage. There’s no doubt about that. How serious a shortage and the magnitude of it depends on the next three years. It may already be too late for the West because the West is always happy for the short-term benefits of low-priced oil. The glut has helped the western economies, this is true. But the ultimate results of short-term thing will come later on and they will not be pleasant.”
In New York, oil analyst Walter J. Levy believes Yamani is right. “There will be a third crisis in the 1990s, for sure. By then the Arab oil producers will be in the driver’s seat again Production in the non-OPEC world will be considerably less. And the only readily available huge source of new oil production will be in the Middle East. What’s more, America is not doing much to prepare for this and that is scary. In the States we’ve been talking about a free market price for oil. But oil prices cannot be left to a completely free market. The price of oil should be at such a level that non-OPEC countries can afford the cost of exploration. Personally I doubt that King Fahd knows anything about oil. I’m sure he thinks he knows but doesn’t actually know what he’s doing. At the moment things are going reasonably well so we don’t know how much Yamani is missed. If and when the world becomes more in need of Arab oil, they could bring the prices back into the stratosphere, which could easily happen by the mid-1990s.”
In Washington DC, Edward Fried at the Brookings Institute agrees. “A third oil shock is possible but I think it will take a different form from the first two. It won’t be quite as drastic, although any large supply interruption would cause fairly large short-term responses in the oil market. And a substantial short-term supply interruption could arise. Like another war or some drastic turn of events in the Middle East. After all, the majority of the world’s oil reserves are held in a very few countries whose politics are uncertain, to say the least.”
But, he says, “Don’t misunderstand me. A number of things are different now than they were during the first two oil shocks. Firstly, we know a lot more. A lot of the damage that was done then was a result of our own policies. There was a scramble for supplies and almost all of the countries that tried it then were, almost by definition, unsuccessful. That is, they got supplied by paying higher prices. So we’ve learned. Second, there is a substantial amount of emergency stocks now, which we didn’t have at all in the early ‘70s and damn little of it in 1979-1980. Third, the major oil producers have learned a lot too. Particularly moderates like the Saudis. They understand that the price of oil is elastic. By that I mean that, if prices rise sharply, there will be responses in demand over three to five years. This is a much more sophisticated game as played by both sides. They’re much more knowledgeable.”
Also in Washington, James Schlesinger isn’t quite as optimistic. “Today the United States has a de facto energy policy, which can be called ‘Growing Energy Dependence.’ By around 1990, according to current trends, we shall be importing nine million barrels a day and have reached for the first time in our history the 50 percent dependency level. In the middle 1990s we shall require as much as 13 mbd of imports, if it is available. We are now sowing the seeds of the next energy crisis.”
And he, too, is well aware of the change that is about to come over OPEC. “By the early 1990s, we shall see a world oil market dominated by an ‘inner cartel,’ fewer in number than the present OPEC, consisting of the principal Persian Gulf producers. Were Iran to crush Iraq, that ‘inner’ cartel might itself be dominated by Iran. We’re actually witnessing a curious race. Between the restoration of OPEC’s power over oil pricing and the erosion of America’s oil production capacity. This is an entirely unsatisfactory situation.”
Back in London, Yamani says this is absolutely true. “I am concerned about the impact of a decline in the US oil industry. Considerable damage has already been done. It must stop. Otherwise America will be forced to rely on the Persian Gulf, which is a part of the world, I assure you, that you do not want to allow yourselves to rely upon. Some day, maybe as soon as the 1990s, Americans will look back and curse the officials who allowed this to happen.”
There has not been a Soviet delegation stationed in Saudi Arabia since 1938 when Stalin ordered his ambassador home and had him shot.
Then again, oil wasn’t as important to the Russians in 1938 as it’s about to become.
Yamani continues, “The Russians are right now sending something between 1.5 mbd and 2 mbd to the satellite countries. They will continue to produce and to export, but by the middle of the 1990s the satellites will require more than Russia can supply so the group as a whole will be net importers.”
The way Yamani reads the situation, although the Soviets are building coal and nuclear resources which could save them up to half a million barrels a day, their Eastern bloc allies are becoming a serious drain on their resources.
“The Russians only do barter deals with the satellites,” he says, “because the satellites can’t get enough hard currency to buy oil any other way. It puts the Russians in a politically strong position over their allies. But while they certainly have enough oil for themselves, as long as they keep supplying the satellites they will have to go looking for more oil at the very same moment that there will be a net shortage in the world. They will become net importers of oil just when the third oil crisis happens. That’s why they’re interested in the Gulf.” ^
He credits Gorbachev with being an intelligent man who came to power realizing that, by the mid-1990s, the Soviet Union could be bankrupt. “Their defense budget is far too high. It’s out of proportion with the rest of the economy. And, until Gorbachev came along, all of their best scientists, all of their best engineers, all of their brightest young students were being put to work in the defense industry simply to keep up with the arms race. If they were working on planes and missiles, they could hot be working on factories or building a strong manufacturing base or helping to create a solid economic infrastructure to support the country in the years ahead.”
So Gorbachev needs to get his scientists and his engineers and the bright young students out of the missile factories and into other industries.
Yamani maintains, that’s what glasnost and the arms reductions deals are really all about. “It is very clear that the Russians have to cut back spending on arms and get out of the arms race or they risk going broke by the mid-1990s when they have to import oil to support the satellites.”
And that, says Yamani, opens up two dangerous possibilities. “First, if Gorbachev’s policy of moderation leads to an arms control treaty which makes the Europeans and the Japanese less fearful, then their need for a strong leader, i.e. the USA, will be gradually reduced. If at the same time Russia can become economically strong, then before long you might see a one-superpower world.”
Yamani’s second worry is that, just in case Gorbachev can’t turn the country around fast enough, the Russians are already starting to take a serious look at the Gulf.
He points out that, even before their occupation of Afghanistan, the Soviets built a road from Kabul straight down to Baluchistan, heading directly for the Arabian Sea. It was constructed at enormous expense, cutting through largely uninhabitable and hostile terrain.
It’s there, Yamani is convinced, for the express purpose of moving Soviet troops, through Afghanistan to the mouth of the Gulf at the Hormuz Straits.
He warns, “Russian ambitions have not changed. They want to rule the Gulf. And because by the mid-1990s they will need oil for their satellites and because there will be an oil shortage in the world which could reach a crisis point, they will have no choice but to try to put an oilfield under their umbrella. What they want is to buy oil for rubles rather than dollars.”
They are, he continues, already working hard at trying to increase their influence in the area. They are specifically moving closer to Iran by building stronger economic ties, which he says can reasonably be expected to lead to a stronger political relationship.
The Russians have also cast a flirtatious eye towards Saudi Arabia. In 1985, when King Fahd’s son Faisal was in Russia with a Saudi Arabian soccer team, he was approached by officials there who told the prince, “We have lost the key to our legation in Saudi Arabia. Might you have another?”
It was their way of diplomatically saying, isn’t it time we thawed the ice.
*****
In January 1987, the newly installed Saudi oil minister went to Moscow to speak with the Russians. Hisham Nazer was there ostensibly to see if the Soviets could be persuaded to work with OPEC in trying to get oil prices higher. But he also met with the Soviet Prime Minister, Nikolai Ryzhkov, and spent over two hours with the Foreign Minister, Edvard Shevardnadze. He left with the Russians agreeing to a token cut in crude oil exports as a show of solidarity with OPEC.
A month later in London, the Saudi Ambassador hosted a dinner for the Soviet Ambassador. That was followed by the appearance of three Soviet diplomats at a London reception hosted by a Saudi magazine. None of these things had ever happened before.
Since then, the Soviet Deputy Foreign Minister has made an official visit to Kuwait, the UAE and Oman. Playing off the fall of the Shah, reminding the Gulf state leaders that the United States cannot be counted on to protect you should Iran win the war against Iraq, the Soviets are overtly romancing the Arabs.
They are also Iraq’s biggest ally, having supplied it with billions of dollars worth of arms and aid.
And Yamani finds all this very worrying. “The West is underestimating the threat. The simplest thing for the Russians to do when they get desperate for oil, which they will by the mid-1990s, is to conquer an oilfield. And if that happens, if they get a foothold in the Gulf, they will soon control the Gulf. We’re now talking about World War III. So it is for the West to counter the Soviet’s influence now. The oil-producing states cannot do it themselves. The Soviet threat makes even more urgent the need for a settlement of the Arab-Israeli conflict.”
*****
Henry Kissinger was coming to speak at Harvard and there was some sort of a protest group who planted a bomb but took the trouble to warn everyone that it was there.
“You understand,” Yamani says, “there are a lot of Democrats who go to Harvard.”
The bomb went off in the empty hall before the speech. No one was hurt. But the force of it blew down the false ceiling. And some bundles crashed to the floor. No one knew who put them there or how long they’d been there.
Inside was a huge collection of old photographs.
At first glance it was determined that they’d been taken in the Middle East, some time before the turn of the century. But then they were studied more closely and experts at Harvard’s Semitic Museum decided the photos were scenes of Jeddah, Mecca and Medina.
Yamani, who has always been intensely interested in supporting the Semitic Museum, was told about the photographs. “I heard about these old photos, and realized they might be the earliest photos known of those three cities. So we had them printed using modern techniques. And to my absolute amazement, in one of them, we found that people were recording sound. These were very early photographs and the idea of recording sound at that point in time was fantastic.”
Obviously the photographer of that particular photo was long dead. But Yamani decided it was worth a try to find any surviving members of the photographer’s family. He encouraged the museum to embark on a worldwide search, which eventually led to Holland and the photographer’s grandson.
As luck would have it, the grandson had some of these sound recordings. Harvard University is now convinced that they are the earliest recordings of sound known to man.
*****
If and when the third shock comes, the oil weapon could be rolled out again.
“OPEC will be changed by then,” Yamani notes. “By the mid-1990s it will be a different organization than it is now. Some members will disappear as exporters of oil. The bulk of OPEC’s oil will come from the Gulf. The Arab oil producers will find themselves in a very powerful position. Oil as a political instrument has already been used once with success. This time no one would have to use it. They would just have to talk about it. The West has not forgotten.”
Nor have the Arabs forgotten that there is still a dispute going on with Israel. And that the Americans continue to support Israel. And that the Al Aqsa mosque in Jerusalem is still denied them.
“There are two kinds of oil weapons,” James Schlesinger says. “People keep mixing these things up. One kind of oil weapon is the economic oil weapon. To extract more money from the West. One is, will prices rise again? Will we have to be more deferential to the oil-producing countries than we are in this loose market? Will the Arabs ever again attempt to deny oil to the United States, to punish the United States? I think that oil weapon is dead. But as an instrument of subtle power it’s going to come back.”
He feels that the West, and in particular the United States, didn’t take Faisal and the Saudis as seriously as they should have in that early period in 1973. “This was just another king, another head of state, we could well have brushed him off. Today we take them even less seriously than we did in the 1970s. That’s partly because of the personalities. Partly because Faisal was a much more impressive man than Fahd. And partly because of the widespread belief that there’s a glut and the glut is going to be around forever so we don’t have to take them seriously. Much of this is encouraged by the American Jewish community and they are quite mistaken. They’re pooh-poohing the return of the general oil problem. It helps them short term in what they want to do. They don’t realize that the more we pooh-pooh the oil problem today, the greater is going to be the oil problem in the 1990s and the greater therefore will be the bargaining power they will have to contend with on behalf of Israel. I think they’re quite shortsighted. But the tendency in the Jewish community is that it’s over with.”
More important, Schlesinger and Yamani both agree, is the American-Israeli relationship in the period of oil glut.
The two countries have become especially close for a variety of reasons. High on the list is that George Shultz, who is reputed to be pro-Arab because he’d dealt with them when he was at the head of Bechtel, got so angry at Syria’s President Assad during the Lebanon crisis that he turned a lot of his attention towards Israel.
Says Schlesinger, “One of the consequences of that has been a lessening of our interest in the Saudis and a, distancing of the Saudis from us - partly because they must and partly because they want to. I say they must. Cozying up to the Americans when the American position is synonymous to that of Israel is very difficult for Arab leaders.”
Surrounding that, Yamani sees another, potentially more dangerous problem. “Over the next several years the number of Arabs in the occupied territories and inside Israel will continue to grow. You merely have to look at the birth-rate statistics to see that one day the Arab population in Israel will exceed the Jewish population there.”
His sense is that only two things can possibly come from that. “Either the Arabs must be given the rights of citizens, allowed to vote and to take part in the affairs of the country, which will change the character of the Jewish state. Or the Arabs living there will forever be relegated to being second-class citizens. The problem here becomes one where you have a repetition of apartheid, the way you find it in South Africa. The Arabs will make up the majority of the population and yet they will have no rights.”
Yamani believes there is only one solution. “It is time that Israel recognized, for it’s own security and well-being, that they, must open a dialogue with the Arabs and help secure a homeland for the Palestinians. There is no other solution possible.”
But distrust runs deep. The Arabs don’t seem to understand that 5,000 years of Jewish paranoia is not easily overcome. While the Israelis don’t seem to understand that answers which might have been workable in 1948 may no longer be viable today.
It might be different for both sides if they each knew who they were dealing with.
A report on Yamani, filed at an agency in Washington, reveals that while he was studying at Harvard the then Israeli Ambassador to the United States, Abba Eban, was friendly with one of Yamani’s professors. Eban was a frequent visitor to Harvard. And Yamani met him there on several occasions.
In the Arab world, at least around the Gulf, Yamani will for many years to come enjoy senior statesman status. He also has what so few other Arab statesman have. He commands great respect in the United States yet maintains a direct line of communication to the moderate Palestinians. Eban enjoys that senior statesman status as well, and also carries respect in the United States.
If Anwar Sadat could talk to Golda Meir and at least begin to melt the ice formed by two wars in seven years, it’s just possible that a well prepared Yamani-Eban dialogue could be a positive step.
But would Yamani be willing to sit down with Eban and try to work something out? And would Eban be willing to sit down with Yamani? Given time to prepare the way, given the chance to create the right sort of forum and given the proper political support, it’s hard to see how either could refuse.
*****
Every morning, early, he’s on the phone, talking to people in the Middle East where it’s two to three hours ahead of Europe.
He says he always tries to ring his mother twice a day from wherever he is. And if his children aren’t with him, he always speaks to each of them every day too.
From mid-morning until well into the early evening, the phone seems to ring near him every few minutes as business slows down for the day in Saudi Arabia and begins to pick up in North America.
Then, late at night, when it isn’t ringing because most people think he’s asleep, he’s back on the phone talking to people in the States.
Much of his telephoning is just keeping in touch with old friends, he says, and he obviously spends a great deal of time and money doing that. So many of his old friends are in awe of the way he maintains relationships.
The rest of those phone calls are business.
Business, he’s asked, or just interests?
He says, business.
But surely, he’s told, you don’t have to work for a living if you don’t want to.
He looks a bit surprised that someone should say such a thing. “Yes, of course I do. I can’t just let my investments slip. You know, it costs me a lot of money to live.”
That it must.
At the same time, Zaki Yamani is not the kind of man who could ever really retire. He has too many aspirations.
He’s formed a private publishing company to produce high-quality books of historically important Islamic manuscripts.
He continues teaching on a part-time basis, lecturing on various aspects of law, sometimes on Islamic law, sometimes on the business of energy.
He takes an active role in his law firm.
And he’s also set up some important charitable trusts.
But he won’t talk about that side of his life. He says his benevolence is his own private affair, and anyway, “Once such activities are widely publicized, you lose some of the self-satisfaction and the pleasure that comes from trying to do some good.”
Then there’s the energy center he’s established in London. “We’ve built a very unique energy center in the West which cooperates with the top universities and institutions in the world. I created it because I felt it’s necessary to have objective studies for energy problems which deal with the matter from a global point of view.”
But again, that’s all he wants to say. “I don’t like to talk about these things. I’m supporting them with my own money for my own reasons. I prefer to go about doing these things quietly. I am not doing it to get headlines. I am doing it because I believe in them.”
When he was in government, Yamani calculated that he spent half the year in Saudi Arabia and the other half in his plane.
These days, that doesn’t seem to have changed much. “So far we find that we continue to spend half a year or so at home in Saudi Arabia. But never in one stretch. Sometimes it’s a month, like for Ramadan. Sometimes it’s only a week. The rest of the time we travel.”
When he’s travelling, he spends the majority of that time in Europe, although, having now firmed up his Harvard connection as a guest professor, he’s a regular visitor to Boston.
In many ways, the little boy who once wanted to emulate his father and become a great teacher has grown up to do just that.
It’s hardly a surprise to hear that when he left government the phone didn’t stop ringing with offers from friends in the oil business. He could have made it onto the main board of any number of major multinational corporations. With very little effort he could have set himself up as the world’s premier oil consultant. But he chose to busy himself with his own projects instead.
Still, a friend of mine figured, that might not stop Yamani from doing a little freelance consulting work in a spare moment. My friend rang one night to say, do me a favor and ask the Sheikh what I should do. Tell him I want to take a position in the market. Go ahead, please, find out what he thinks about the price of oil.
It was a personally embarrassing thing for me, to ask for this advice as if I was trying to get a movie star’s autograph.
“I keep telling you,” Yamani says, now aiming the silver- topped wooden cane at me to make his point, “I personally always think long term. I’m too cautious by nature. The future’s market is too much like gambling and I’m not a gambler.”
“It’s not for me,” I insist. “It really is for a friend.”
“Well,” he says, “All right. Tell your friend if he wants to gamble to go short. But tell him I said he’s not investing, he’s gambling.”
I did. I told my friend, “Sell.”
And the price of oil promptly went up.
*****