Paribas had no stake in either of these two European-Arab consortium banks, and was debating whether it might be appropriate to join one of them. If the Bank were to join a consortium, it would want to take an active role in banking activities in the Gulf, rather than merely take a financial interest. This strategy was prompted by the fact that the Middle East s share of world crude oil production continued to rise - from 24 percent in 1960, to 39 percent by 1971.

Early in 1970, Paribas learned that Banque Franco-Arabe d Investissement was preparing to expand its circle of shareholders and bring in Italian bank Banca Nazionale del Lavoro (BNL), Belgium-based Société Générale de Banque and Spanish private bank Banco Urquijo. Some members of the senior management of Paribas were tempted to apply and debate the opportunity, although Jacques de Fouchier was opposed to Paribas participating in consortium banks, regarding them as too difficult to control. This ongoing strategic debate did not prevent Paribas from continuing to seek contacts and visiting the Gulf States, with the interest still driven by de Kémoularia.

A strong indicator of Paribas interest in the Arab world in general and the Gulf States in particular was the foundation of the Franco-Arab Chamber of Commerce in Paris in 1970. Paribas was a founder member of the organisation, and its first treasurer was Hubert de Saint-Amand, Head of Middle East and Africa at Paribas.

French government push

The French government wished to develop strong economic relations with the Gulf States. President Charles de Gaulle s policy towards Arab countries, a policy continued by his successor Georges Pompidou, meant that France received a warm welcome in the region. Jean de Lipkowski, Secretary of State for Foreign Affairs, had recently visited the Gulf States, and this visit had resulted in the decision to appoint a French ambassador to each state. The political climate was therefore propitious for good economic relations.

The continuing increase in oil revenues was now transforming the region into one of the greatest sources of international liquidity and created a situation where the oil-producing states, especially the emirates with their small populations, were having difficulty finding a suitable outlet for these new funds. This capital was mainly being used to finance the countries development plans but, as flows increased, it became necessary to seek investment channels outside their own borders. So they began to consider not only lending the oil revenues out but also making capital investments in industrialised countries.

Against this backdrop, de Kémoularia visited the Gulf States in May 1972, aiming to push ahead the process of opening branches. The trip was arranged in co-ordination with the French Ministry of Foreign Affairs, and de Kémoularia received valuable assistance from Paul Carton, the French ambassador to Kuwait, who had just received diplomatic accreditation from the other emirates in the region.

HUBERT DE SAINT-AMAND,

HEAD OF MIDDLE EAST AND AFRICA AT PARIBAS AND TREASURER

OF THE FRANCO ARAB CHAMBER OF COMMERCE IN PARIS, 1979

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