THE JUSTICE DEPARTMENT wants to investigate charges of price-fixing involving Saudi Arabian oil. Four American oil companies are partners in Aramco, which produces most of it.But the majority owner is the Saudi government. The Saudis are adamant in refusing the Justice Department's demands for internal Aramco financial data, and they threaten retaliation if those demands persist. The U.S. State Department is pressing Justice to back off.
It's another step in the Justice Department's campaign to treat other governments as though they were American companies subject to American antitrust laws. The department is being pushed by several congressional committees. But the State Department is, unfortunately, right in its warnings of the damage that these grabs for extraterritorial jurisdiction are doing to American interests.
An earlier case began with Canada's policy of setting minimumm prices on its uranium, some of which was being mined by an American company. That also seemed to the Justice Department to be a violation of American law. But there are not many subjects in world politics more touchy than the United States' voracious appetite for other countries' natural resources and American pressure for more production at lower prices. To other and smaller countries dealing with American oil and mineral companies, this legal campaign against their price policies has a sinister implication. It looks to them like an official attempt to reach through the American-based multinational corporations to force down the prices for the oil and the ores this country wants.
It's hard to think of a more foolish target for the Justice Department's zeal than Saudi Arabia and Aramco. For one thing, the Saudis are currently selling their oil for $8 a barrel less than, for example, the producers in the British North Sea. One very large question at the OPEC meeting next week in Caracas will be Saudi pricing for the coming year. Beyond that, Saudi Arabia can take over Aramco completely whenever it chooses. For the present, it has left the four American companies with 40 percent of the partnership because, presumably, it wants them to continue as engineers and managers for the fields. With a few more orders on the American companies for internal Aramco data, the Justice Department can succeed in effecting the complete nationalization of the company. But those are tactical considerations, and secondary. It's the principle that's wrong.
The Justice Department seems to be saying that when foreign governments deal with American companies, they become part of the American economic system and consequently fall under the requirements of American commercial law. Canada has formally taken vigorous exception to that idea. So has Great Britain. So will Saudi Arabia.