Iran

HC Deb 28 January 1974 vol 868 cc22-6

23. Mr. Dalyell

asked the Secretary of State for Trade and Industry if he will make a statement on his discussions on trade with representatives of the Government of Iran.

Mr. Peter Walker

Negotiations were satisfactorily concluded during the course of my discussions at St. Moritz last Friday. As a result Britain will receive an additional 5 million tons of crude oil from Iran during 1974 and the early part of 1975 and will supply £110 million worth of British goods during the same period. The oil will be purchased by BP acting as agents for Her Majesty's Government. Parliamentary authority for the expenditure will be sought in the usual way. We reviewed the progress being made on the £250 million of industrial joint-venture projects in Iran, which were negotiated at the Iran/United Kingdom Investment Conference last November. We also agreed to examine at an early date the potentialities for Iranian investment in the United Kingdom and agreed that there were many spheres in which substantial investments from Iran into United Kingdom industry and technology could be of mutual benefit to both countries. This agreement marks a further important stage in the valuable and increasing inter-relationship between the economies of Iran and Britain.

Mr. Dalyell

What proportion of the £110 million will be represented by arms sales, and what discussion took place on the short-term use of Iranian finance for developing countries?

Mr. Walker

The answer to the first question is "None". On the second question, Iran is taking an increasing interest in the problems of the countries of the Third World and recently the Iranian Government have had negotiations with India to assist in the development of that country's economy. In addition, they are taking a far greater interest in the economies of a number of African countries where I believe that economic assistance and aid will be of great value.

Mr. Powell

In negotiating these particular purchases and sales with the Shahanshah of Iran, are the Government acting as principal or agent?

Mr. Walker

In negotiating the purchase of oil we were acting as principal. As for negotiating individual commodities, the individual companies carried out their own negotiations and obtained their own contracts and these are therefore individual contracts between the British companies and the companies and public agencies in Iran.

Mr. Kaufman

Since the right hon. Gentleman and the Chancellor were ready to hurry to St. Moritz at the flick of the Shah of Iran's finger, will they now at least meet Mr. Joe Gormley, perhaps in a Butlin's holiday camp, and discuss with him the miners' pay claim, since coal costs one-third the price of oil for heat generation?

Mr. Walker

I only hope that if the Labour Party ever become the Government they will not take the same nauseating patronising attitude towards Iran as the hon. Member adopts.

Mr. Skeet

I congratulate my right hon. Friend on the deal which he has negotiated. I assume that BP will be the agent for the Government, but is not that acting in favour of one company when there are other marketing organisations in the United Kingdom? Will my right hon. Friend indicate whether petroleum products and not merely crude oil are covered by the agreement? Will he indicate also, since the price is about seven dollars a barrel, whether there is any way of ensuring that the consumer benefits?

Mr. Walker

On the first point, with the Government having such a substantial equity interest in BP it is right for that company to act in this case. On the second question, the oil is crude oil of various qualities, both light and heavy. On the last question, some of the companies—for example, those which will be producing petrochemicals and therefore needing oil—will be guaranteed to receive this oil at the price obtained in these negotiations.

Mr. Lawson

Has the Secretary of State noticed that one of the European Commissioners and a former Member of this House has been warning this and other West European countries not to engage in these separate deals because of the great dangers they have for divisions within Europe? What is the approach of the right hon. Gentleman and the Government to this question?

Mr. Walker

Our approach is that it would be a mistake for the United Kingdom or any other Government to enter into deals which would inflate the price of oil world-wide. To indulge in a scramble for oil would be a mistake. However, as a result of these negotiations the oil will be delivered at stable prices currently provided by the consortium and it in no way has the effect of inflating the world's oil prices.

Mr. Hugh Fraser

Would not my right hon. Friend agree that, in principle, it must be bad policy to keep up the price of oil by these individual barter deals? Surely we should try to keep in touch with the Americans and use the large oil companies to protect a market which we are now encouraging to be held at ransom. Surely every trade in the world agrees that this is precisely what the Labour Government did when they started bulk purchase schemes in the 1950s, thereby keeping up world prices.

Mr. Walker

I remind my right hon. Friend that spot prices for oil have recently reached 17, 18 and 20 dollars a barrel. In the light of such prices, obtaining a stable price for one year of seven dollars a barrel is surely a bargain.

Mr. Benn

Is the right hon. Gentleman aware that on both sides of the House there will be a general welcome for sensible commercial arrangements which secure oil for this country? Is he further aware, however, that the public do not understand why, if that makes sense to the national interest, the Government should be losing £400 million a week as a result of their present attitude in not paying the miners the income they richly deserve, and this at the very time when the nation needs to acquire more miners if the coal is to be dug in the quantity required?

Mr. Walker

It is because we take the opposite view to the one which the right hon. Gentleman ascribes to us that we are offering the miners more than the Labour Government offered in their six years of office.

Several Hon. Members rose

—

Mr. Deputy Speaker

Mr. Lamont.

Mr. Dalyell

On a point of order, Mr. Deputy Speaker. In view of the unsatisfactory nature of the reply, I beg to give notice.

Mr. Norman Lamont

Is my right hon. Friend aware—

Hon. Members

This is out of order.

Mr. Deputy Speaker

Order. I called the hon. Member for Kingston-upon-Thames (Mr. Norman Lamont).

Mr. Lamont

Is my right hon. Friend aware that, while the deal announced will no doubt have great advantages for the United Kingdom, many people, whether for or against the EEC, will share the preference of Sir Christopher Soames for a multilateral rather than a bilateral approach to the problem of the oil deficit? Is it not extremely difficult to separate the financing of oil deficits from the price of oil? Will my right hon. Friend therefore give an assurance that the Government will treat the important question of recycling the proceeds of the Arab oil surpluses as a matter of urgency, above all on an international basis?

Mr. Walker

There is every evidence that the present Government have done everything possible to encourage a unified approach throughout Europe to these problems and have also supported Dr. Kissinger's initiatives. There is nothing at all in this transaction with Iran which in any way damages those initiatives.