e-mail us
The politics of oil


Call it a marriage of convenience or an unholy alliance, the relationship between the world’s most powerful democracy and a repressive monarchy almost as severe as the Taliban could grow even stronger in the wake of the terrorist attacks of Sept. 11. Those attacks are calling new attention to the costs and benefits of the alliance between the United States and Saudi Arabia.

At the heart of the alliance is oil -- Saudi Arabia’s possession of it, the United States’ reliance on it and the perceived need to defend U.S. access to it. Throw into the mix billions of dollars in lucrative arms sales the United States has made to Saudi Arabia, a sophisticated regional command center the U.S. military built in Saudi Arabia, and the American public’s enthusiasm for cheap oil, and you have some understanding of what holds together this otherwise international odd couple.

The United States buys about 20 percent of its crude oil imports from Saudi Arabia. The flow of trade operates both ways, with the United States the kingdom’s largest trading partner. It is not, however, the strong commercial relationship between the United States and Saudi Arabia, but the security ties that have developed between the two since the Gulf War that are the main irritant for those opposed to the U.S. presence. The U.S. troops on Saudi soil and U.S. support for a corrupt Saudi regime are among the reasons Osama bin Laden, the accused mastermind behind the attacks on the World Trade Center and the Pentagon, cited for his declared holy war against the United States. For bin Laden, U.S. troops should never have come to Saudi Arabia, home to Islam’s two most sacred sites, Mecca and Medina, and the troops certainly should not have stayed once the war against Saddam Hussein ended. Even before the Sept. 11 attacks, two previous terrorist incidents in November 1995 and June 1996 took the lives of 24 American servicemen in Saudi Arabia.

Bin Laden still enjoys considerable popularity with many Saudis, who share his dissatisfaction with the ruling al-Saud clan and who are not convinced that bin Laden is responsible for the Sept. 11 terrorist attacks. While bin Laden is anathema to the ruling family, many ordinary Saudis admire him for his defiance of what they deem American arrogance. The New York Times recently quoted one American-educated professional as saying “The royal family are the only people who don’t like Osama bin Laden, because he is questioning their presence, their future.”

Critics of the Saudi regime claim that it squanders its fabulous wealth on lavish salaries for the 6,000-member royal family, who have institutionalized bribery as a way of life and collect fat fees for brokering arms contracts.

Need for U.S. troops

Among American analysts, a range of opinion exists about the need for U.S. troops in Saudi Arabia.

“Energy is one of the highest strategic concerns in the world. They [the Saudis] have one-fourth of the entire world oil reserves and a low population. The [U.S.] troops are stationed there to protect the country. They have a relatively small population compared to their two potential greatest adversaries, Iran and Iraq. Our military presence is there to help us defend them,” said David E. Long, a retired Foreign Service officer who served in Saudi Arabia and is the author of The Kingdom of Saudi Arabia. Long’s point of view is shared by many foreign policy experts.

Stephen Zunes, associate professor of politics and chair of the Peace and Justice Studies Program at the University of San Francisco, suggested other motivations may be factors in U.S. policy. Zunes argued that the United States has troops in Saudi Arabia less to protect the kingdom from external foes than to gain a military foothold in the most important oil-producing region in the world.

“The United States has gone to great length to convince the Saudis that we need to be there. Even among U.S. allies in the Gulf, there’s enormous skepticism about what actually motivates the ongoing U.S. presence there, given the increased moderation of Iran and the fact that Iraq’s military power is only a fraction of what it used to be,” Zunes said. “The threat to the Gulf Arab monarchies has been greatly exaggerated by the United States. Indeed, the Saudis have on several occasions banned the United States from using Saudi territory to launch attacks against Iraq, even though in theory the United States is trying to protect Saudi Arabia from Iraq.”

The relationship between the United States and Saudi Arabia goes back to the 1940s when American companies built the Saudi oil industry after the discovery of oil there in the 1930s. Military ties between the two countries date back to 1945, but have grown more entwined since the Gulf War. Shortly before the war, U.S. troops were rushed to the country in Operation Desert Shield to defend it from the threat of Iraqi aggression, though Soviet satellite photos published by the St. Petersburg (Fla.) Times later indicated the Iraqis were digging into defensive positions around Kuwait City, not massing on the border with Saudi Arabia, as the United States government claimed at the time. Iraq, the United Arab Emirates, Yemen and Oman are among the other countries bordering Saudi Arabia.

After the war, about 5,000 American troops remained in Saudi Arabia, where they participate in the enforcement of the no-fly zone in southern Iraq. Ostensibly there to protect Saudi Arabia from Iraq, U.S. troops are segregated from the Saudi population as much as possible. The restrictions seem both a response to Saudi concern about the presence of foreign troops in the country and an effort to limit Western influences in a country that adheres to a puritanical form of Islam and does not grant basic human rights such as the right of people to change the government they live under or the right to free assembly, speech and religion.

Gulf nations have to sell oil

Though the word “moderate” is often used to describe Saudi Arabia in American press reports, Zunes points out that there is little that is moderate about Saudi Arabia. “Saudi Arabia doesn’t have a constitution or a legislature. It’s the most conservative, misogynistic, fundamentalist regime in the Arab world except for the Taliban itself.”

Gregory Gause III, a member of the Middle East Policy Council and a professor of international relations and Middle East politics at the University of Vermont, calls the stationing of U.S. troops in Saudi Arabia a classic case of short-term aims vs. long-term aims. “In the end, no matter who governs these countries in the Gulf, they have to sell us oil. They can’t drink the stuff. It’s the only thing they have. In the short run, any kind of upheaval in these countries can have really important short-term effects on the markets. That’s a serious consequence. If you recall, the consequences of the oil price increases in 1973-74 were very damaging to the economy as a whole. In the end, prices came down, but it took a while. It’s that short-term worry about the impacts of political disruptions of the oil market that drives us to be there.”

Join to that concerns about oil being controlled by Iran or Iraq, the only two countries in the region with sufficient population, oil and water resources to threaten American hegemony in the region, and a clearer picture emerges of U.S. policy in the Persian Gulf.

“Saudi Arabia and the other Gulf states are the last big oil patch, and the United States doesn’t want that oil to be under the control of unfriendly regimes. There’s a strategic consideration that ties in with the Arab-Israeli conflict. We saw the connection between oil and the Arab-Israeli conflict in 1973, when an Arab-Israeli war led to an oil embargo and we don’t want that to happen again,” Gause said.

The greater security ties between the United States and the Persian Gulf countries and those countries’ own greater revenue needs under the pressure of high population growth makes the prospect of a similar oil embargo much less likely. In any case, many economists say it doesn’t pay for the United States to defend the Persian Gulf.

The Cato Institute, a libertarian public policy group, has opposed the posting of U.S. troops to Saudi Arabia as it does America’s military commitment in the Persian Gulf as a whole. “Proponents of an activist U.S. policy usually cite Persian Gulf oil as the primary reason to maintain current policy,” the institute said in a report sent to the 105th Congress. But the institute said that while unhindered access to Gulf oil is desirable, it is not sufficiently so to be of vital interest to the U.S. economy. “The United States currently buys only $11 billion worth of Gulf oil per year, yet U.S. taxpayers spend $40 billion to $50 billion [some analysts estimate as much as $70 billion] per year to defend the region,” the Cato Institute report stated.

Economists opposed Gulf War

A consensus seems to exist among the national security community that the United States needs to protect oil, but this is not a consensus shared by most economists, said Ivan Eland, director of defense policy studies at the Cato Institute. Before the Gulf War, Eland said economists on both sides of the political spectrum such as Nobel laureates Milton Friedman, a strong free-market advocate, and Keynesian economist James Tobin, former adviser to President Kennedy, spoke out to say that the United States could go to war with Saddam Hussein if it wanted to, but it shouldn’t go for oil.

An econometric study conducted by David Henderson, an economic adviser to President Reagan, concluded that if Saddam Hussein had taken control of not only Kuwait’s oil supply but had also invaded Saudi Arabia and the United Arab Emirates, the United States’ gross domestic product would have dropped only .5 percent because of higher oil prices.

“The supposed need to defend oil comes from the trauma in 1973,” Eland said. “The reason we had gas lines was because the government didn’t let gas prices rise. They had wage and price controls on. They increased the monetary supply because they thought the higher oil prices would lead to inflation.” But economists now believe that the stagflation of the 1970s was caused not by oil price increases but by economic mismanagement, Eland said.

Nonetheless, the oil shortage of 1973 has shaped U.S. policy ever since, though in Eland’s opinion with questionable consequences.

“What happened in the Gulf War was that we said we were fighting for oil, but we basically shot ourselves in the foot,” said Eland, who remarked that U.N. sanctions on Iraqi oil sales have taken much more oil off the world oil market than the Iraqi invasion of Kuwait ever threatened to.

“We got a patriotic feeling from a great tactical victory, but did we actually win there?” Eland asked.

Long before the terrorist attacks of Sept. 11, the Cato Institute was on record as calling for the United States to terminate its security commitments in the Persian Gulf, including its commitment in Saudi Arabia, and instead to encourage countries in the Persian Gulf to take over their own defense.

“Iraq has about half of its military that it had during the Gulf War. Saudi Arabia has a gross domestic product that is much greater than Iraq’s, and Saudi Arabia has a much larger military budget than Iraq’s. Even if Iraq is a threat -- and there’s a lot of question whether Iraq could mount an attack --why can’t these countries that have bigger GDP than Iraq defend themselves? We shouldn’t be more concerned about their defense than they are,” Eland said.

Sanctions, sanctions, sanctions

“If this [terrorist] attack had never happened, the question would be, do we really need to spend the money to defend oil in Saudi Arabia, and most economists would say no,” Eland said.

Nicholas Berry, a senior analyst with the Center for Defense Information, said that, given the current counter-terrorism campaign, it is unlikely that the United States will revise its troop commitment in Saudi Arabia soon. Such a move “would tend to confirm bin Laden’s complaint if we rethought publicly our deployments in Saudi Arabia,” he said.

A frequent traveler to the Middle East, Berry called the deployment of troops in the country that is home to Islam’s holiest sites “insensitive” and “inflammatory” because of the special Mecca-Medina relationship.

“The Islamic world is a very complex world,” Berry said. “The Islamic world feels put-upon. Even though there may be admiration for American power, they are sensitive to American arrogance.”

Partly to address this, Berry said the United States should alter what he described as its “excessive” reliance on economic sanctions, which are imposed on different countries because of terrorism, nuclear programs, weapons sales or violations of human rights.

“Every Islamic country, from Indonesia all the way to Morocco, is under some form of U.S. sanctions. They may be very mild but they have them,” said Berry. “We’re often unilateral in our sanctions, which allows the Japanese, the Italians, the French, whatever to monopolize trade. And it builds resentment, and that feeds terrorism.”

Berry said the economic sanctions against Iraq have been particularly damaging, helping Saddam Hussein maintain his grip on power while harming the U.S. image in the Islamic world.

“The rationale is to keep Iraq poor so it cannot develop weapons of mass destruction and thereby threaten Israel and others. The very presence of weapons of mass destruction would threaten Israel. The rationale behind his [Hussein’s] program is not necessarily to use them but to become a leader of the Arab world against Israel,” Berry said.

The U.S. dependence on oil requires the United States to provide stability for the region, but that does not necessitate a commitment to prop up foreign regimes, Berry said. And it does not exclude measures to promote human rights and democracy.

If the debate about U.S. troop deployment in Saudi Arabia seems an arcane argument among specialists, it all ultimately comes back to everyday consumption patterns of the American public. Unfortunately, reducing U.S. demand for oil through a gasoline tax, such as exists in Europe, is politically unpopular and unfeasible, Long said. While increasing automobile fuel efficiency just three miles a gallon would save the United States 1-and-a-half million barrels of oil a day, Long believes Americans are too attached to cheap oil to consider changes to their lifestyle. “People don’t want to give up their SUVs until they’re forced to,” he said.

The cost of U.S. policies may be reflected in other ways than the price of oil, however. Charles Knight, co-director of the project on defense alternatives at the Commonwealth Institute in Boston, counts among them not only the Sept. 11 attacks on the World Trade Center and the Pentagon but the assassination of Bobby Kennedy by Sirhan Sirhan, a Palestinian.

“It’s been a costly history we’ve had with the Middle East,” said Knight, speaking of the policies and regimes the United States has backed. “Whether we get a bargain out of that in terms of cheap oil is beyond my expertise.”

Margot Patterson is NCR's senior staff writer. Her e-mail address is mpatterson@natcath.org

National Catholic Reporter, October 19, 2001