This was the great exception to what was standard procedure in the international oil-trading business right up until the beginning of the 1970s. Only around 5 percent of the world’s oil was freely traded according to the law of supply and demand, whereas the other 95 percent changed hands according to long-term contracts and at fixed prices. Since World War II, the global oil market had been dominated by the “Seven Sisters,” the leading international oil companies.

Any economic network is largely dependent on trust if it is to function well. As economists put it, a high degree of trust lowers the costs of transactions and compensates for a lack of information.

“It’s only a good deal when the two signatories are laughing together at the table. That’s the only way a partnership can have any future. Otherwise it’s the only deal you’ll make,”

“It was always clear to me. We need to have a long-term relationship with our customers. This was our big advantage, the fact that we had a long-term supply. We had oil available, and our competitors did not.” He could thus supply the American (and European) oil companies with the oil they so dearly needed. “He was one of the most reliable traders in the sense that if he [said he] had some crude, he really had it,” one of his former American buyers said.11

He did not want to ask for the highest possible price, as that would have contradicted his long-term strategy. “To sell a product at the highest possible price to a client in need is like taking candy from a baby,” one of Rich’s experienced traders explained the company’s philosophy. “We just wanted to make something on top of it all. We knew the customers would be grateful and would someday make it up to us. We were investing in the future. The highest price was not the most important factor. What was important was to build up a stable position and a stable business relationship.

Beginning in 1973, Rich would serve as Israel’s most important supplier of oil for twenty years. Israel’s very survival was dependent on the trader. Rich remembers selling Israel 1 million to 2 million metric tons per year, approximately 7 million to 15 million barrels. The country’s oil needs were between 100,000 and 200,000 barrels a day in the 1970s.17 In other words, Rich provided at least one out of every five barrels.

Our discussion of Rich’s own case developed into a conversation on the tendency of the United States to put its own laws above the laws of other nations. Europeans have a humorous expression: The United States has three main exports—rock ’n’ roll, blue jeans, and its view of the world. “The United States wants to apply its own peculiar laws to the whole world,” Rich claims. “I was and am satisfied that Switzerland lived up to its historic image and did not allow itself to be bullied by a big nation.” He adds in German, “Die Schweiz verbeugte sich nicht.” Switzerland did not bow.

The commodities trade is a hard, capital-intensive business with tight margins. Profits of 2 to 3 percent are considered quite satisfactory in normal times. It is only during unsteady times, such as the oil crises of 1973–74 and 1979–80, that profits are significantly higher.

“The key to success—and to real wealth—is long-term thinking,” Rich says. Six months in South Africa in order to negotiate the purchase of a mine? Six months in Cuba in order to ensure a loan is paid back? Advance financing of a smelter that will not be completed for years to come? Such actions are nearly unthinkable for listed companies obsessed with quarterly returns. In some businesses, long-term thinking has been virtually forgotten. On the other hand, it is the traditional virtue of family businesses in which one generation always has its children in mind. It is my belief that this long-term way of thinking is the most important secret of Rich’s success and can explain many of the strategies and courses of action he has followed over the years.

Rich was always interested in obtaining long-term contracts with his clients. In economic terms, the development of new markets, making business contacts, and negotiating contracts cost a lot of money. Once a business relationship has been established, many of the so-called transaction costs no longer apply. The longer the relationship, the lower the marginal costs and the higher the potential profits. “We didn’t get into a new country to make a million dollars and then go home. We went to stay there,”

The bribing of foreign officials was legal in the United States until the passing of the Foreign Corrupt Practices Act of 1977. In Switzerland it remained legal until 2000. Companies in Switzerland and in many other countries could deduct bribes as “commercially justified expenses” from their taxes. When asked about corruption, Rich’s lawyers maintain that he never broke Swiss law. A trader who was active in African nations such as Nigeria and Zaire—two notoriously corrupt countries—told me, “The law is the benchmark, not your morality. As a trader you should abstract yourself from your personal morality. If you don’t agree, you can leave the company.”

“Marc Rich’s people were always prepared to make a counteroffer such as prefinancing, a contact, or a bank account,” an industrialist from Ghana told me. Marc Rich + Co. took this concept to the point where the company soon began to serve as a kind of investment bank for several developing countries. These were countries that would have had difficulties obtaining credit on the regular financial markets, usually as a result of their poor credit ratings. Even if they could find someone who was willing to offer them credit, the interest rates were exorbitant. Rich’s company financed the construction of mines, smelters, and refineries or the production of oil in Jamaica, Zaire, South Africa, Namibia, and Angola. In return Rich asked for exclusive rights to sell all commodities produced in the country for a period of one year or more.

Rich’s companies were willing to accept the smallest of profit margins—and ready to take an occasional temporary loss—in order to break into a market or enlarge their market share. The trade in commodities—and this is particularly true of aluminum—is a cyclical business. A one-or two-year period of high prices can be followed by longer periods of low prices. Those traders who are prepared to operate against the cycle, hold out during dry spells, and even invest during hard times can reap good profits when the prices again begin to rise. There is no better example of this strategy than Rich’s Jamaican aluminum trades.

“Sometimes we knew critical information before the CIA, especially regarding events in Iran.” Marc Rich and some of his employees regularly shared this knowledge with U.S. and Israeli officials. I have spoken with several traders who were involved in this exchange of information, and they have substantiated this version of events. They were following the trader’s proven motto: Give and you shall receive.