Global Policy Forum

By Edmund L. Andrews

Vienna - Wearing an impeccably tailored charcoal pin-striped suit as he relaxed in his sprawling hotel suite here tonight, Sheik Saud Nasser al-Sabah of Kuwait was feeling distinctly worn out by American politics.

As oil and gasoline prices have soared in the last several months, Members of Congress have charged that Kuwait has been enriching itself at the expense of American consumers and that it has blithely forgotten that the United States fought a war to liberate it from Iraq. Now, under heavy American pressure, Kuwait and other members of the Organization of Petroleum Exporting Countries are reluctantly planning to raise production and to bring modest relief.

But as Kuwait's oil minister, Sheik Saud was far from happy about that and granted a rare on-the-record interview to The New York Times to make his case. "Today's price is fair and reasonable as far as we are concerned," he said. "What really made the difference was that in April 1999 people in the United States could buy gasoline for 98 or 99 cents a gallon. When prices corrected, there was an uproar."

Far from enjoying an unearned windfall, he asserted, Kuwait was barely recovering from the disastrous decline in prices in 1998 and early 1999. "Unfortunately, we are in an election year," the sheik continued, referring to the American campaigns for president and Congress. "We are in a situation where Republicans are trying to upstage Democrats. We don't want to become entangled in domestic American politics, but we are becoming entwined."

This has not been a particularly good decade for oil producers.

Adjusted for inflation, oil prices have consistently slumped far below the heights reached in OPEC's heyday in the 1970's. Analysts estimate that OPEC lost about $65 billion in revenue last year as a result of declines in oil prices, to as low as $11 a barrel.

For Kuwait, a tiny country sitting atop some of the world's biggest oil reserves, the downturn had a huge impact. With 93 percent of its revenues coming from oil, the government's $4.4 billion budget was short $2 billion in both 1998 and 1999. "To balance our budget, we need to sell Kuwaiti oil at about $21 or $22 a barrel," said Sheik Saud. "We're not even talking about a surplus. Is that too much to ask for?"

The talks in Vienna this year have been unusually sensitive because oil prices have nearly tripled in the last 12 months and American gasoline prices have soared from about $1 to well over $1.60 in many cities.

Saudi Arabia, the world's largest producer and the country that overshadows all other OPEC members, has been the leading proponent for an increase in production of about 1.7 million barrels a day. Kuwait and other gulf states like the United Arab Emirates and Qatar have been less enthusiastic but prepared to follow the Saudi lead. "It is completely exaggerated," Sheik Saud contended, for Americans to complain that Kuwait is ungrateful for American willingness to lead the Persian Gulf war and to force Iraq out of Kuwait after its invasion in 1990.

"Had the United States not intervened to help Kuwait then, Kuwait would not have any oil to export now," he said. "We don't want to harm the United States. We just want to defend our own interests."

On Thursday, the House of Representatives passed a bill that would urge the administration to consider cutting off aid and military sales to OPEC countries that try to push up oil prices by constraining demand. President Clinton has opposed the bill, arguing that it is much too heavy-handed. But the energy secretary, Bill Richardson, has toured the capitals of many oil exporting countries in the last few weeks in an effort to persuade them of the need for big increases in oil production.

The fact that oil prices could take another plunge is not the least of the sheik's worries. Two years ago, prices plunged after OPEC agreed on modest increases in production. A year ago they soared far beyond all expectations after new cutbacks. In the last two weeks, prices have once again started sinking, though at $28 a barrel on Friday they were at levels that most producers would consider close to nirvana.

"We would like to know," the sheik said, "What price do the Americans consider acceptable? We feel as if we are between a rock and a hard place."