January 23, 2002

What's behind Washington's split with Riyadh?

Washington is all atwitter over what appears to be a sea-change on the foreign policy front: evidence of a developing rift between the US and Saudi Arabia, its most loyal Arab ally. Since World War II, Washington and the House of Saud have enjoyed a lucrative and seemingly permanent alliance, in which the former provided protection against enemies at home and abroad, while the latter provided a steady stream of oil profits for politically-favored American companies. The US went to war against Iraq, in 1991, and stationed close to half a million US troops on the Arabian peninsula, supposedly to protect Riyadh from a threat posed by Saddam Hussein. Now, it appears, the events of September 11 have produced a split in this formerly rock-solid relationship, with talk of an impending Saudi demand for a US withdrawal. The Washington Post reports that

"Saudi Arabia's rulers are increasingly uncomfortable with the U.S. military presence in their country and may soon ask that it end …. Senior Saudi rulers believe the United States has 'overstayed its welcome.'"


The response to this has been fierce, and Congressional Democrats have been particularly bellicose, with Senator Joseph Lieberman, a putative presidential contender, going so far as to declare that a "theological iron curtain" was falling over the Arab world, including Saudi Arabia. Senator Carl Levin (D-Michigan), powerful chairman of the Senate Armed Services Committee, took up this "cold war" theme with some particularly hot rhetoric, saying he had "an uneasy feeling" that the Saudis were coddling Islamic terrorists and that American forces were "not particularly wanted" there:

"They act as though somehow or another they're doing us a favor. And I think the war against terrorism has got to be fought by countries who really realize that it's in everybody's interest to go after terrorism. I think we may be able to find a place where we are much more welcome openly, a place which has not seen significant resources flowing to support some really extreme, fanatic views."

Levin and Lieberman were joined by Rep. Ike Skelton, top Democrat on the House Armed Services Committee, who averred that the Saudis "need to cleanse the place of potential terrorist groups."


This fusillade comes as the climax of a furious post-9/11 anti-Saudi propaganda campaign that has gone into overdrive in recent weeks. From noting that most of the alleged hijackers were identified as Saudi nationals to screaming headlines about a dispute between a visiting Saudi princess and her maid, the anti-Saudi jihad has become an intellectual paradigm for the theoreticians of a new cold war. Neoconservative ideologues such as Daniel Pipes and Stephen Schwartz, see Wahabism as the totalitarian flavor of the new millennium, just as the varieties of socialism (Stalinism and Nazism) were the scourge of the twentieth century. This view has been popularized – indeed, one might say novelized – by a new book, written and published inside of a few weeks, Bin Laden, The Forbidden Truth, by Jean-Charles Brisard and Guillaume Dasquie, described by the Los Angeles Times as

"A dense, conspiracy-minded portrait of Saudi-dominated banks, companies and tycoons, all allegedly interconnected, that they maintain have helped fund Bin Laden's holy war."


This Saudi-devil theory, which posits that we ought to have bombed Riyadh in addition to Kabul, is senseless if we compare it with the facts. For Bin Laden is an avowed enemy of the House of Saud, and is pledged to their overthrow. As Peter L. Bergen points out in Holy War, Inc.: Inside the Secret World Of Osama bin Laden:

"Bin Laden also believed the House of al-Saud, the family that has ruled Arabia for generations, were 'apostates' from Islam. Apostasy is a grave charge to level against the Saudi royal family, who style themselves the protectors of the two holiest places in Islam, Mecca and Medina, and practice the most traditional form of Sunni Islam."

In addition Bergen relays the charge of Khaled al-Fawwaz, an Al Qaeda sympathizer who helped arrange Bergen's interview with Bin Laden, that "several assassination attempts have been mounted against [Bin Laden] by Saudi intelligence services." Al Qaeda's holy war against the US military presence on the Arabian peninsula makes a particular target of those who invited the Americans in – the House of Saud.


Brisard and Dasquie basically say that the Americans let 9/11 happen because of a "softness" on the Saudis on account of the influence of Big Oil in American politics. This is what supposedly motivated the Bushies to enter into secret negotiations with Bin Laden prior to September 11. The popularity of the Brisard-Dasquie book in France is understandable, as it blames the Americans for the disaster that befell them, but the lesson really ought to stand for the Europeans as well, says M. Dasquie:

"The U.S. is not the only one. The question is why developed countries need to do commercial deals with Saudi Arabia and if those commercial deals are why they must close their eyes about the reality of the Saudi Arabian kingdom. Since the 18th century, Saudi Arabia has been focused on conquering the world."

Such an overweening ambition would be difficult to hide, but isn't it funny how nobody ever noticed it before? And another thing: this "forbidden truth" theory being a lot of marlarkey, what, then, is the real reason for the anti-Saudi propaganda campaign, so ably and relentlessly conducted by a broad coalition of neoconservatives (the Weekly Standard, Commentary, the New York Post) and liberal Democrats (Lieberman, Levin, the New Republic)?


The interest of congressional Democrats in the "Forbidden Truth" thesis is understandable, especially if they can make the charge of "secret negotiations" stick. If the Bush administration was not only "soft" on terrorism but even somehow protected their Saudi allies from scrutiny by law enforcement agencies, then who benefits? The Bush family, long tied to the Saudis, is fair game once the "Forbidden Truth" conspiracy theory becomes the conventional wisdom: George Herbert Walker Bush, reviled by some for his pro-"Arabist" policies, is the particular target of this left-wing hate campaign.


The neocons, no friends of Bush pere, also have much to gain. They blame the father for not "finishing the job" and concluding the Gulf war prematurely, even as they exhort and try to shame the son into a military confrontation not only with Iraq, but with nearly the entire Islamic world. Weekly Standard editor Bill Kristol didn't waste much time after 9/11, quickly mobilizing a phalanx of intellectuals and other policy wonks calling for an all-out invasion of a whole list of Arab nations: not only Iraq, but also Iran and Syria – and I'm sure none of the signers would object to the addition of Saudi Arabia.

Okay, so at least two groups of ideologues – and I can think of a few more – on the right and the left have some interest in propagating the "Forbidden Truth" scenario, but, by themselves, these people are just a bunch of writers, policy wonks, and political hacks, without the resources to do anything but bloviate. The real power – that is, the money power – behind the anti-Saudi campaign are the same financial interests that have profited from the Saudi-US alliance lo these many years: the Rockefeller family, the controlling factor in the Arabian-American Oil Co., Aramco. And therein lies a story….


In return for US aid and support for the House of Saud, King Ibn Saud granted Aramco a monopoly over the production of Saudi oil at the end of World War II. Aramco is a consortium of companies, with Exxon, Mobil, and Socal – all Rockefeller-connected – granted 70 percent ownership, and Texaco granted the rest. A premier example of crony capitalism, the Rockefeller-Saudi alliance translated into multi-millions in subsidies through the Export-Import Bank, so that the King could build his own personal railroad from his capital to the summer palace. Franklin Roosevelt took money out of the war budget to prepare the way for Rockefeller's pipelines. In return, the Saudis granted the US an airbase at Dharan, conveniently near the oil fields. Smalltime capitalists hire private security guards to protect their property, but the big boys – or, at least, some of them – have the use of the American military.


The Saudi-Aramco relationship has endured a lot. There was a phony "nationalization" of Aramco in the 1970s, when Nasserite and Baathist socialism were all the rage on the Arab "street": the Saudi government took over Aramco, formally, but then immediately turned around and granted the Aramco-Rockefeller consortium the exclusive contract to "manage" the operation. Under this new deal, the consortium would get the lion's share of Saudi oil, with the rest going to Petromin, the state-owned company. As Murray N. Rothbard succinctly summed it up:

"It all boils down to a happy case of the 'partnership of industry and government' – happy, that is, for the Saud family and for the Rockefeller oil interests."


This was the rock upon which the US-Saudi alliance was founded, and anyone who questioned the necessity, wisdom, or cost of this friendship – let alone calling for a US withdrawal – was roundly denounced as a foolish "isolationist." Now, the same people who hailed the Gulf war and the imperative of defending the Saudi oil fields, have turned on a dime, and are not only calling the historic friendship into question, but openly wondering if the Saudis are enemies.

How to explain this sudden about-face by the chattering classes, the political mavens, and now a growing number of mostly Democratic politicians? I say – follow the money!

Oh, but "everything's changed!," they cry. How can you be so cynical? Don't you know that skepticism is out and earnestness is in? Be that as it may, I can only report the facts as I see them, and what I can tell you is that everything changed well before September 11, 2001, as far as the Rockefeller oil interests in Saudi Arabia were concerned.


The pivotal event occurred without much public notice, on September 23, 1998, during Crown Prince Abdullah's visit to the US, where he met with the presidents of the major US oil companies, "with whom he exchanged cordial talks and reviewed issues pertaining to petroleum affairs," as the Saudi embassy website delicately phrases it. But the reality lurking beneath the veneer of diplomatic phrases was a lot rougher: according to widespread reports in the Arab media, the Prince basically told the Aramco consortium that their monopolistic state-privileged status was about to be revoked. A very interesting piece by Adel Darwish in the Middle East Analyst purports to give us the inside scoop on the Prince's message to this gathering:

"During a private, hour-long meeting on Saturday 23 September at the house of Saudi Ambassador Prince Bandar bin Sultan in McLean, Virginia, with senior executives representing seven American oil companies: The four American oil giants Mobil Corp, Exxon Corp, Texaco Inc. and Chevron Corp. (which established the Arabian American Oil Co now known as Saudi Aramco, in the 1930s) the other three were Atlantic Richfield Co., Conoco Inc. and Phillips Petroleum Co.

"According to sources close to the meeting, [the] Prince [told] the executives to submit directly to him a study of 'recommendations and suggestions' about the role their companies could play in the exploration and development of both existing and new oil gas fields, said one participant in the meeting. The same source said that the executives appeared 'shocked' by the major policy reversal. Saudi Arabia began nationalizing its oil industry in 1973 and has adamantly excluded foreign oil companies from production operations ever since."


Adamantly excluded but for the Aramco consortium, that is – until now. Abdullah, the heir apparent to the invalid King Fahd, is a modernizer who has decided that it's time to throw open the doors of free competition and let the free market take over. The deal was off. The Rockefeller stranglehold on Saudi oil production was about to end, announced the Prince, and this surely sent waves of shock through his audience. Indeed, the shockwaves are still being felt today, as the US ponders not only withdrawing its troops from the Saudi kingdom, but whether our longtime ally is really our deadly enemy.


The Saudis, usually close-mouthed about business matters and subtle policy shifts, were more than forthcoming in broadcasting their declaration of independence. Prince Abdullah went to the trouble of granting an unusual interview, in which he said exactly what happened at that historic meeting:

"In 1998 I had a chance to meet with a number of executives from major oil companies. We had discussed the investment opportunities in the Kingdom especially in light of its stability and the availability of huge oil and gas reserves. I had indicated to them, at that time, that we welcome, and we will be willing to look into, any investment ideas that might be of benefit to both sides."


Abdullah's vision of a modernized Saudi Arabia is to be financed by a new arrangement with Western oil companies, and an opening up of the Saudi economy to competitive foreign investment. He boasted of receiving proposals "from 18 of the top oil companies in the world" worth a total exceeding one hundred billion dollars and ranging from "production, processing, transporting and distributing of gas to refining, transporting and marketing of oil and building the required infrastructure." The Prince went on to politely but firmly declare his defiance:

"All this will take us a long way towards the creation of a solid and integrated economy that realizes the full economic potentials of the oil and gas industry and will open new and wide investment opportunities for the Saudi private sector. And it is important to keep in mind that money invested in projects in Saudi Arabia means less money available for investment in competing projects elsewhere."


A very interesting comment, that last: what are these "competing projects"? This is none other than the Transcaucasian "Silk Road" pipeline project, slated to extend from the Caspian Sea oilfields to Turkey, and perhaps down through Afghanistan to the Indian Ocean. This project has long been on the drawing boards, and the Clinton administration took it up with alacrity, even going so far as to set up a special department to facilitate its creation. If the foreign oil companies were going to try to go around them, said the Prince in so many words, then two could play that game:

Q: "Your Royal Highness what about Saudi Aramco? Will it assume a new role following the formation of the council and the invitation of the international oil companies?"

A: "We are proud of Aramco's achievements through the years and our dealings with foreign companies will never be at the expense of Aramco. I believe the presence of these companies will strengthen Aramco and sharpen its competitive edge. Aramco, has, I believe, the administrative and technical expertise and know-how that enable it to compete effectively with these companies."


With the price of oil steadily falling, Abdullah is strapped for cash. Darwish cites Yehya Sadowski, associate professor of Middle East studies at Johns Hopkins School of Advanced International Studies, who says the Saudis exhausted their capital assets paying off the US for the cost of the Gulf War. Faced with the looming prospect of bankruptcy, and increasing competition in the oil market from South America and Central Asian states of the former Soviet Union, Abdullah's choice was made out of necessity: the alternative is continued stagnation and the indefinite postponement of modernization.

In any case, the glee with which the heir presumptive to the Saudi throne delivered a lecture on free market economics to the leading capitalists of the West should be shared and appreciated by free marketeers everywhere.


In spite of the Prince's reassurances that the Rockefellers would get their fair share – and no more – it is doubtful that the assembled Aramco executives were all that appreciative of the little lesson in Economics 101. Their great unhappiness is what is really driving this anti-Saudi hysteria. Oh, you've got to modernize, say the globalist policy wonks, you've just got to open your borders to free trade and open up your markets to free competition: let the market rule! This is the advice routinely given, but, when it is finally taken, the reaction is a concerted campaign of calumny and vilification.


After years of close military cooperation between the two countries, a female pilot pops up who objects to settled rules on proper attire while serving in the Saudi kingdom – and becomes a feminist icon overnight. All of a sudden, we hear from Andrew Sullivan about the persecution of homosexuals under the strictures of Sharia law, a cause that somehow previously escaped his attention. Virtually overnight it is discovered by all sorts of instant "experts" that Wahabism, the official state religion of our longstanding ally, is the equivalent of Nazism if not outright devil-worship. That this sudden awakening to the alleged "Saudi threat" occurred in tandem with the Rockefeller's acrimonious (and costly) break with the House of Saud is, of course, the purest coincidence.


A number of public figures have weighed in on this potentially explosive issue: Bill Clinton warned against the withdrawal of US troops from the region (surely an argument in favor), while Neil Bush urged the Saudis to make a better case for themselves. But the momentum is all the other way, and, while the administration is denying that any withdrawal is being contemplated, clearly the Bush people are speaking only for themselves. For if and when Abdullah asks the US to set a departure date, this is sure to set off a new round of renewed Saudi-bashing, one that the new cold warriors look forward to with gusto – and which the rest of us have good reason to fear.


The dissolution of the Rockefeller oil monopoly, and the creation of a truly independent Saudi Arabia, with freer markets and without the burden of justifying the presence of foreign troops on its soil, will strengthen the forces of modernization and expand the margins of freedom in the Middle East. That is why the withdrawal of US forces would be a giant step forward in defeating the Bin Ladens of this world. It is a divorce that will benefit both: however, all divorces contain some bitterness, no matter how outwardly amicable, and it is going to be all too easy for the War Party to segue straight into an adversarial relationship with our former ally. And therein lies a great danger.


With Max Boot of the War Street Journal complaining about the paucity of American casualties in Afghanistan, clearly our bloodthirsty hawks were disappointed in the brevity of the Afghan campaign, and yearn for more. The same arguments made by the warhawks of National Review for an invasion of Iraq could be applied with even more force to an alleged "threat" from Riyadh. As our foreign policy tends inexorably toward an all-out assault on the entire Arab world, the Saudis will take the place of the Soviets in the demonology of the new cold war – at least that is the hope in certain quarters.


When Crown Prince Abdullah called off his sweetheart deal with Aramco, he incurred the wrath of some very powerful people, and it was only natural that they would seek revenge. Speaking through Jeff Jacoby – in an act of ventriloquism that no doubt had the dummy-columnist's full cooperation – the Aramco-Rockefeller consortium delivered this "ultimatum" to their former business partners:

"We would make it clear to the Saudi princes that we expect their full cooperation no matter where the war on terrorism takes us. And if it takes us to a land war in Iraq, Saudi Arabia will make its military bases available for staging the invasion.

"Will the Saudis refuse? Will they protest that complying with our demands will mean the toppling of their regime? Either way, our course will be clear: We will seize and secure the oil fields."

How convenient.

"But our purpose would not be plunder."

Oh, of course not!

"We would appoint a respected, pro-Western Muslim ally to run the oil industry in trust for the Muslim world."

I imagine Aramco has a few suggestions.

"No longer would the petro-wealth of Arabia be used to advance Islamist fanaticism and terror – or to maintain a decadent royal family in corrupt opulence. It would be used, rather, to promote education, health, and democracy throughout the Middle East."

– and to fill the coffers of the Rockefellers and their corporate allies, who won't allow the prize of oil-rich Araby to escape their grasp quite so readily.

"The Gulf's great riches, now a well spring of disorder and unrest, could be transformed into a force for decency, stability, and peace."

The Gulf's great riches, in other words, will stay right where they are: securely deposited in Armaco's bank account. So the revenge of the Rockefellers plays itself out on the world stage: they'll retain their monopoly on the largest known oil reserves – one way or the other.


So far, President Bush has made it plain that he does not mean to wage war on Islam, and for that he is being made to pay a price. While his State Department is struggling to undo the damage done by the anti-Saudi media and the Lieberman-Levine assault in Congress, a grand coalition of left and right is pushing for World War III in the Middle East – a war that, given the presence of Pakistan and India (not to mention Israel) in the equation, could quickly go nuclear.

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Justin Raimondo is the editorial director of Antiwar.com. He is also the author of Reclaiming the American Right: The Lost Legacy of the Conservative Movement (with an Introduction by Patrick J. Buchanan), (1993), and Into the Bosnian Quagmire: The Case Against US Intervention in the Balkans (1996). He is an Adjunct Scholar with the Ludwig von Mises Institute, in Auburn, Alabama, a Senior Fellow at the Center for Libertarian Studies, and writes frequently for Chronicles: A Magazine of American Culture. He is the author of An Enemy of the State: The Life of Murray N. Rothbard.


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