Siphoning off of Surplus

The historical relation of the underdeveloped countries with the
developed countries has, besides many other things, meant the
drain of the large portion of economic surplus generated in the
‘third world’ to the metropolitan countries. This has been well-
documented,® and it is not necessary to go into statistical details
here. If this was true during the colonial times, it is still truer
today. The large income from ‘third world’ is one of the most im-
portant reasons behind foreign investment. (See Tables 3 and 4).
Profits and other revenues which are repatriated by the
multinational corporations represent a net loss to the host
economy. The size of this loss is difficult to estimate, especially af-
ter the nationalisations where associaton with foreign capital takes
such forms as Management/Service Agreements. The profits and
interests on loans, etc., made by the corporations equity holders
and shown officially in the accounts in themselves are substantial
but this does not give the true picture. Most of the companies that
enter into partnership with the N.D.C. for instance, are members
of some global group. This means that the company concerned is
in an excellent position to manipulate intercorporate prices, over
invoicing etc., thereby enhancing the profits of the Group as a
whole. We shall cite a few examples to illustrate this.

In Iran the International Qil consortium pay S0 per cent in-
come-tax to the Iranian Government from the profits computed
by the consortium. The old prices are fixed as follows. Firstly, the
profits are computed after deducting the overhead costs, which
the consortium is in a position to raise. ‘Thus the consortium
deducted so-called sales overhead costs totalling some 6 million
from its net profit year after year before paying out Iran’s share.’®!

Secondly, according to the rules of the Oil Cartel, the price of
crude oil has to be same throughout the ‘free’ world and this price
is based on the cost of the oil whose production cost is the
highest, i.e., oil from the Gulf of Mexico, less the cost of tran-
sportation from the given oil field to the Gulf of Mexico. Thus the
price for Persian Gulf Oil is fixed by deducting the shipping costs
from the Persian Gulf to the Gulf of Mexico from the price of the
Gulf of Mexico, $ 23 per ton or $ 15 per ton After deducting
prime costs from this, Iran receives its 50 per cent share. The fact,
however, is that the Iranian oil is not sold in the Gulf of Mexico
but in the Persian Gulf. The shipping costs are therefore entirely

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