Business as usual: the Saudi-US relationship.

Seznec, Jean-Francois

The Saudi-US relationship has consistently been described as an exchange of oil for security. However, since 1944, when US President Franklin Roosevelt and King Abdel Aziz met in Egypt, Saudi Arabia has used more US goods, management systems, technology, medical facilities, and training than those from any other country in the world. The relationship rested on much more than just oil and seemed robust enough to withstand the inevitable strains of relations. However, the development of Saudi-US relations held the seeds of its own destruction and was all but destroyed after the crisis of September 11, 2001.

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Today, Saudis from all ways of life--taxi drivers to merchants, ministers, and princes--will provide visitors with an earful of varied negative aspects of US policy. They speak at length about the perceived shabby treatment of Saudis in the United States: students cannot obtain visas and the ill are denied access to hospitals. The Saudis profoundly resent the controversial treatment of prisoners at Guantanamo Bay and Abu Ghraib. They explain the US invasion of Iraq as a neo-conservative plot by Washington and Israel to weaken the Arab world. They perceive the legal suit against senior royal family members in New York as money-grabbing tactics by trial lawyers. They resent the negative press coverage of Saudi Arabia, especially the stories and editorials in the Wall Street Journal. Many Saudis fear US President George W. Bush's pre-emptive policy of first strike, which they see as a possible prelude to the United States invading the oil fields of the Eastern Province. Most of all, the Saudis overwhelmingly resent the Bush administration's support of Israeli Prime Minister Ariel Sharon and his policy of developing new settlements in the West Bank and his ruthless, albeit intifada-related, occupation of Palestinian territory.

In the United States, many members of the media, the US Congress, and a number of US think tanks view Saudi Arabia as responsible for September 11, 2001, primarily because of the systematic development of a worldwide jihad against the United States and its values. The problems extend well beyond September 11. Some see Saudi Arabia as using its fabulous oil wealth to maintain a corrupt regime, and through its control of OPEC, blackmailing the United States into overpaying for its oil. They see Saudi Arabia as oppressing women and promoting religious intolerance--both within Islam and between Islam and the Judeo-Christian world. The reports of the arrests of Christians for merely attending a service, the interdiction of owning a Bible, the arrests of Sufis, or the oppression of the Shi'a are all well publicized. Numerous articles on the corrupt and profligate ways of many Saudi princes add to the strong resentment of Saudi Arabia. Of course, the Saudi state was also heavily criticized before September 11, 2001, for not cooperating with the US Federal Bureau of Investigation in the investigation of the Al-Khobar bombing, which killed many US personnel. After September 11, 2001, the Saudis were further criticized for not adequately tracking terrorist funding.

The Common Interest

The Saudi-US relationship started with a common interest in oil. US companies founded Saudi Aramco after British Petroleum had written off the desert kingdom. Aramco, under US leadership, trained the large number of Saudis who now comprise 92 percent of the country's work force. The US oil company's shares in Aramco were eventually purchased by the Saudi government in the mid-1980s. Nevertheless, Saudi Aramco still uses US management and has become one of the world's most respected oil companies. Aramco is largely free of political interference and all of Saudi Aramco's senior managers hold degrees from US universities and speak fondly of the United States.

The United States is also responsible for designing Saudi Arabia's remarkable industrial development. The industrial cities of Jubail and Yanbu were designed by Bectel. The Saudi development bank, Saudi Industrial Development Fund, was organized by Chase Manhattan Bank. The electric grid uses US standards and was to a great extent designed by Stone and Webster after 1975. The largest petrochemical joint ventures are between Sabic, a state-owned company, and ExxonMobil as well as Chevron Texaco. The University of Petroleum and Minerals, which trains oil engineers, was designed by US nationals, as were the most advanced hospitals in the country.

The financial links between the authorities of Saudi Arabia and the United States were also quite strong. The Saudis kept most of their oil income in US dollars, invested in US government treasury bills, thereby financing part of the chronic US deficit. All Aramco oil sales are in dollars and are paid in US banks who then pass on the money to Saudi Arabia's institutions' accounts, which are held in the same banks. JP Morgan has had a permanent adviser at the Saudi Arabian Monetary Agency for a number of years. The two countries are inextricably linked in terms of finances.

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Military cooperation is yet another area of extensive relations. The joint Saudi-US military commission in Riyadh designed and arranged for the purchase of huge arms systems including F-15s, F-16s, AWACS, tanks, and missiles. These arms systems are maintained by US firms or British firms using US parts. The Saudi National Guards are trained by Vinnell Corporation. After the 1990 Gulf War, the United States maintained a command center for the region together with a large number of troops and airplanes in the Prince Sultan air base in Al-Kharj south of Riyadh.

Until recently, all these links translated into hundreds of billions of dollars in purchases in the United States by the Saudis. To this day, Saudi Arabia imports more than US$4.5 billion per year from the United States. Even though the number has substantially declined from the US$10.5 billion of imports in 1998, it is still more than from any other country. The links between the United States and Saudi Arabia involved tens of thousands of Saudis and US citizens working together, which should have provided ample opportunity for extensive cultural exchanges and societal influence between the countries.

Previously, the Saudis helped the United States by increasing oil production in times of supply stress. In 1982, when both Iran and Iraq were forced to reduce their production, the Saudis increased oil exports from 4.5 million barrels per day (mbd) to 7 mbd, bringing the spike in price to a rapid end. In 1990, when both Kuwait and Iraq stopped exporting, Saudi Arabia increased production to 9 mbd. After September 11, the Saudis increased production by 500 mbd to help the United States meet its needs at reduced prices. The Saudis also point out that Aramco sells its oil in the United States and in the process subsidizes US purchases by over one US dollar per barrel on the 1.5 mbd it sells to US firms. The Saudi Oil Minister repeatedly claims to want a stable price of oil between US$22 and US$28 per OPEC barrel (corresponding to about US$26 to US$34 per US-based barrel). The Saudis have provided the United States with the assurance that they will remain the stabilizer of world oil prices.

During the Cold War, the United States and Saudi Arabia found additional common ground. The United States perceived the Saudis as a rampart against the Soviet Union and Communism. The Saudis felt comfortable developing with high-quality US technology. The Saudis also saw the United States as a defender of last resort against the Soviet proxies in the region, primarily Egypt, Syria, and South Yemen. The United States as the main opponent of the "evil empire," could provide security against the spread of "godless" anti-Saudi socialist ideology and Arab nationalism.

When the Soviets got bogged down in their support of a socialist regime in Afghanistan, the Saudis were content to become the proxy of the United States. The Saudis, in particular the Saudi intelligence directorate, led by Prince Turki al-Faysal, encouraged, armed, and financed the resistance and, to a certain extent, "created" the Taliban, with full US support.

The US policy of dual containment assured the Saudis that post-Khomeini Iran and Iraq would be kept in check. In 1982, when Iraq attacked Iran, Saudi Arabia and the United States aligned to support Iraq, providing them with funds, safe harbor for their Soviet-made aircrafts, and oil to make up for their loss of production due to Iranian attacks. The Saudis also allowed Iraq to build a pipeline for the Iraqi southern fields to the Saudi harbor of Yanbu on the Red Sea. This was done with the full support of the United States.

Again in 1990, the Saudis and the United States allied, but this time against Iraq's invasion of Kuwait. The Saudi state provided the bases necessary for the US military, obtained permission from religious institutions and religious segments of the Saudi population to allow the presence of US troops in the land of the holy mosques, and also increased oil production to make up for the loss of Kuwaiti and Iraqi production during the conflict.

Consequently for 56 years after World War II, the two countries have had an extensive and intimate relationship that would seemingly remain resilient to minor adversity. However, the relations are now at their lowest point and appear irreparable. The relations that should have been made strong from 40 years of extensive interaction have also contributed to their destruction.

Societal Contacts and Relations

Saudi Arabia has used a large part of the US$1.3 trillion it earned from oil to develop its economy amd infrastructure. The goal of the various Saudi five-year plans has been to provide citizens with modern infrastructure and to diversify the economy beyond oil production. It needs to import technology, protect its borders, and create jobs for Saudis. In essence, the Saudi state wanted to bring a highly conservative society into the 21st century. However, Saudi internal politics meant that the state could strive for these goals only by getting the assent of its most conservative supporters--the Salafis (the US press commonly refers to them as Wahhabis).

The story of the first Saudi Kingdom being founded as an alliance between the Islamic reformer Abdel Wahab and Mohamed alSaud in 1744 is still relevant today. The Salafis do not oppose Saudi Arabia becoming a major economic power in the world; indeed, oil wealth gives them the means to promote their worldview of Islam. However, the Salafis do not wish to see Saudi modernity create a morally corrupt, Westernized society that could turn people away from the worship of God.

It seems that the Saudi state and the Salafis established a suitable agreement. In the 1960s, King Faysal was able to bring television and radio into Saudi Arabia and managed to gain the Salafis' approval by granting them a share of the broadcast, enabling nearly constant promotion of piety over the airwaves. As the Saudi state pushed society to bring Saudi Arabia into the 20th century, it embraced modern technology, but sought to avoid the inflow of foreigners and the corrupting influence of modern living that often accompany modernization.

After King Faysal's death, King Khaled increasingly co-opted the Salafis. This arrangement with the Salafis tipped further in their favor after the 1979 take-over of the Holy Mosque in Mecca. King Khaled and King Fahd gave the Salafis free rein to control society. Most notably, they controlled women's rights and education. The state allowed the Salafis to develop a heavily religious curriculum inculcated from kindergarten. Additionally, they had constant access to the local mass media. They drastically limited the role of women in public life and the types of jobs they could take. Furthermore, they enforced a severe segregation of men and women.

The state influenced the Salafis by providing them with money to build mosques, Islamic centers, and universities and to promote their causes worldwide. The state also allowed the Salafi self-appointed, extra-judicial police, the Mutawa'in, to enforce public morality much more stringently than before. As the Saudi economy expanded, shopping centers grew up and satellite television brought the world to everyone's home, the Salafis became more strident to counter these influences. Foreigners were ghettoized in compounds and allowed minimal social contacts with Saudis. The United States was criticized in the Saudi media and mosques for its moral decay.

Efforts were made to limit the education of Saudis, especially of women. Any effort by the United States to advance the social standing of Saudi women was portrayed by the Salafis as an effort to destroy Islamic society and a contemptible divergence from God's purpose. The Mutawa'in became more active in maintaining puritan standards, such as enforcing store closing at prayer time, the veiling of women, and even the regulating of private behavior at home. After 1970, despite the huge growth of US brands and technology in Saudi Arabia and the modern additions to life such as traffic jams, cell phones, personal computers, and satellite TVs, Saudi society evolved in a manner that had very little in common with US culture. As a result, the staggering Saudi industrial and commercial development, based on US management and technology, did not evolve into a more open, Westernized, liberal society. Instead the Salafis hijacked US technology to establish hundreds of Internet sites and used computer disks, videos, and audio cassettes to promote their puritan ideology and virulent opposition to US politics and values

Purely Business

The Salafi effort to confront US societal influences meant that government and business contacts became the only points of connection in Saudi-US relations. Unfortunately, even this limited relationship was undermined, especially on the US side. The United States became perceived in the Gulf as having sided entirely with Israel in its struggle with the Palestinians. One cannot underestimate the poisoning effect of the Israeli-Palestinian conflict on US relations in the Gulf. The Arab countries placed the failure of the 1991 Madrid process in the hands of the United States. The first intifada, and now the second, are viewed by the Gulf public and governments as caused and then ruthlessly suppressed by the Israelis--backed by US encouragement and military support.

The build-up to the war in Iraq became a point of contention between the Saudis and the US government. It appears from many conversations with Saudis that they expected the US invasion and occupation of Iraq to lead to widespread violence and upheavals in the Gulf, including destabilization of the present Saudi regime. The rise of the neo-conservatives in Washington as well as the numerous anti-Saudi statements in the US press and think tanks have convinced the Saudis that the US administration is bent on bringing down the present regime, or may even be preparing an invasion of the oil fields.

For a long time, there was a common interest between the US and Saudi governments that extended into economic, political, and military spheres. After September 11, 2001, however, that mutual interest was blown away in both the United States and Saudi Arabia. The old trust, which prospered over a 56 year period, has now disappeared. The business relationship between Saudi Arabia and the United States, nevertheless, remains a substantial asset to the overall relations between the two countries. The United States is still Saudi Arabia's main source of imports, though diminishingly so. Visas to the United States are now harder to get than visas to Saudi Arabia. The merchant families no longer travel to the United States for fear of humiliation at the border. Saudi students prefer traveling to Europe, Asia, or Australia. Young Saudis, not prompted by the Salafis, started a boycott of US brands, resulting in a major increase of imports from China. Imports from China are increasing at the rate of over 40 percent per year and could reach the levels of the imports from the United States by 2006.

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Future Ties

For many years, the United States relied on the Saudis to provide a long-term oil supply to world markets, and the Saudis were able to use the United States as a shield to withstand regional threats. The relationship grew beyond the oil-for-security paradigm to include, and ultimately be dominated by, the exchange of technology for cash. With this transformation, however, the Saudis have sacrificed the previous US influence for the Salafi's control over societal practices and institutions. The United States sacrificed its remaining credibility by following what is largely viewed in the Gulf region as an anti-Arab agenda in Palestine and Iraq.

Of course, Saudi Arabia and the United States still need to trade and maintain basic exchanges. It is convenient for Saudi Arabia to cooperate with the United States to fight the jihadis, since they are a threat to their own regime. Oil is still sold in US dollars and both the Saudi government and US Treasury must cooperate to ensure smooth commercial transactions and flow of oil.

The Saudis are still the largest oil exporters and the only state with rapidly accessible reserves. However, since the cultural and political links have been severely damaged, Saudi Arabia's relationship with the United States is now based on maximizing the financial benefits from oil and minimizing the risk of US intervention in its oil fields. This creates a tenuous balance for the countries to maintain.

The Saudis must preempt anger on the part of the present US administration if only to avoid military confrontation. They will not cancel the old military contracts that they have with the US government, but may not establish new ones to assist the United States in its current war on terrorism or future military operations. The Saudis claim to be committed to the plentiful production of relatively cheap oil, but they only increase production when it is highly profitable. However, to minimize their dependence on the United States, the Saudis maintain a smooth relationship on the surface, but incessantly promote strong relations with the countries most necessary to them in a future without the United States.

The Saudi state is no longer in need of US protection. Saudi Arabia has made an effort to limit regional threats. It has settled border disputes with the United Arab Emirates, Qatar, and Yemen. It has worked diligently to improve relations with countries in the region, especially Iran, Syria, Yemen, and even Iraq. It has also actively cultivated good relations with other countries nearby, such as Pakistan, but outside the region as well, in particular China. Saudi Arabia may not view China as an exact replacement of the United States, but instead as a major piece of a puzzle that includes France, Germany, and India.

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The figure shows the evolution of the initial US-Saudi "oil for protection" agreement. Due to military concerns, the United States was able to construct military bases in Saudi Arabia, thus furthering their political clout throughout the Middle East and creating a new market for US firms. Saudi Arabia capitalized on this relationship to develop into a materially rich society. Saudi economic infrastructure was established by various US firms. And an influx of military supplies and intellectual capital expanded Saudi power. Thus, what was once a simple "oil for protection" arrangement became an intricate bilateral symbiosis.

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JEAN-FRANCOIS SEZNEC is Adjunct Professor of political economy at Columbia University's School of International and Public Affairs.