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Bank, and in this way would then be in a position to look after our 
interests, including those of our businessmen. 
Concerning the position of the petroleum, I must confess that the 
thought which goes through my mind, and I think it is very important 
to be laid on the table and I hope you will follow this thought in your 
line of questioning, is that I do believe the tax aspects play an im- 
portant role. When a U.S. petroleum company operates in Saudi 
Arabia, for example, the total costs to the company are about 50 per- 
cent, of which, say, 15 percent is in royalties, and 35 percent in taxes 
to the Government of Saudi Arabia. 
Under our tax codes the 15 percent is the normal expense taken for 
the cost of doing business. The other 35 percent which really is also a 
fee or a royalty 1s actually treated as a tax under our laws and is taken 
off as a credit, which means the U.S. taxpayer is financing either the 
oil company or the Government of Saudi Arabia, and I think that 
when you look at the fees that are charged, the total of 50 percent is in- 
ordinately high. 
During our subcommittee’s hearings, I expressed the thought that 
our industry was being raped, which the industry considered too 
strong, but 50 percent is a great deal to pay unless the major portion 
can be written off against their U.S. tax liability. If we had an inter- 
national authority, I think 15 percent or 20 percent or 10 percent 
would seem about right and would be in accord with the fees that are 
charged by our own Interior Department, and if we had an interna- 
tional authority, we could make sure that this kind of fee would be 
established because we would have the muscle, the money, and the 
know-how that would make the authority work, just as we have con- 
siderable say in the policies of the World Bank. 
If the time comes when we are not a world power, which I hope is 
long after all of us are gone, but history changes, my analysis would 
change accordingly. But I would think for the foreseeable future that 
we would be able to dominate any international authority, and it 
would be to the interests of our industry to have greater access to 90 
percent of the world’s continental shelves. 
There are other tax considerations which I know you who are law- 
yers are more familiar with than I am, such as doing business through 
subsidiary corporations in which dealing with a particular nation 
the rules are all laid out under our tax code, and largely because these 
rules are established, I think there is a basic apprehension on the part 
of business, particularly the petroleum industry, to do business with 
an international authority. ; 
They know how to do business with nations, but they are a little 
worried about inefficiency, and they have every right to be, based on 
the record of the United Nations. They don’t know just what to 
expect. 
Peitipe if between both our bodies we removed some of the tax 
preferences which the petroleum industry enjoys already, you would 
find also objection to the idea of such an authority. However, I would 
hope—and I am sure they hope that these preferences are not re- 
moved—we can still move ahead in formulating plans for an interna- 
tional authority. , i ; 
There is another question here and that is the relationship between 
industry and individual nations, particularly the developing nations. 
