The World: The Shah: Thoughts of a Royal Decision Maker

The Shah not only decides Iran's foreign and domestic policies, but he generally enunciates them as well. During a recent 90-minute interview at Saadabad Palace with TIME Correspondent Karsten Prager, the Shah candidly discussed a number of key issues, ranging from oil prices and Iran's ambitions in the Indian Ocean to the strength of the country's secret police, SAVAK, and his opinion of Western work ethics. Excerpts:

ON OIL PRICES: The non-Communist world either is not keen on checking inflation or is incapable of doing so. Maybe this is why it does not want to establish a relation between the price of oil and the basket price of other commodities. I think I am rendering a service in proposing this linkage, almost to force you to check your inflation.

Contrary to what certain people think, we are not hawks. We always try to be reasonable. But we also know what we are talking about. Sometimes I wonder why others want to be so generous [in attempting to lower oil prices] at our expense. These are people who say they want to bring prices down, but we have unveiled the true picture. Participation of 100% [referring to Saudi Arabia's expected takeover of Aramco] is going to increase the price of oil by at least another $ 1.10 per bbl. Nobody spoke about that until we unveiled it.

Our proposal is for one price, except for geographic location and quality of oil. That price would be $9.99, plus 12¢—the cost of production in our case. We would sell to the oil companies or, if some countries would like to buy direct, then our price would be $9.91, plus 12¢ production costs.

The advantage of a fixed price would be: no monkey business. There are so many different price systems—halfway price, buy-back price, preferential price, God knows what else. This is where figures can be manipulated, as they have been, not to mention the taxes levied after that by local governments.

ON HALTING INFLATION: You must have leadership and strong governments in the West to stop inflation. There must be an understanding that all must earn the money they take, and there must be a specific value for each type of work. HERALD-SUN If [Prime Minister Harold] Wilson succeeds in Britain, that would be a turning point. The U.S. is more responsible, I think [than Europe]. Americans are not lazy by nature.

ON HIS SUBJECTS: I believe in the maturity of my people and their terrible intelligence—I mean terrible in the sense of something good. They can learn so quickly. With their hands they are like monkeys. They are more individualistic than the Swedes. Nevertheless if they did not work together we could not have achieved what we have achieved.

ON POLITICAL LIBERTY: We don't mind freedom of speech as long as it is not in the service of foreigners. You know how the Communists are and how they can exploit people. As for participation in government, it would be very irresponsible to make people participate who have absolutely no knowledge. Our students will have every opportunity of participating in the government when they are out of the university, when they have seen the country. They will know more then.