Business as Usual with Saudi Arabia?

A not-so-funny thing happened on the way to Baghdad to get rid of Saddam Hussein. Americans came to realize that they might have to take a detour through Riyadh. The famed Rand consultancy has just advised the Pentagon’s Defense Policy Board that Saudi Arabia is the “kernel of evil,” and that serious thought should be given to taking control of the 25 percent of the world’s known oil reserves on which the Kingdom happens to sit. Secretary of State Colin Powell rushed to reassure the Saudi regime that Rand doesn’t make U.S. policy, and Defense Secretary Donald Rumsfeld said the leak of the report is “clearly harmful.” But sources close to the Pentagon tell me that some members of the Saudi royal family “are sufficiently apprehensive” about their country’s increasing unpopularity in the U.S. to fear that the days of business as usual are over.

The Rand report is the culmination of a learning process that has been underway since September 11. First, Americans discovered that the regime that controls Saudi Arabia consists of a bunch of not-very-nice royals. Second, Americans discovered that the House of Saud is the principal financier of the terrorists against whom President Bush has declared war. Third, Americans are beginning to realize that they have to do something about our dependence on Saudi Arabian oil.

Start with the nasty bit. For years Saudi Arabia’s ambassador to the United States, Prince Bandar, managed to create a pleasant image of his country by lavish entertaining, shrewd schmoozing, and making himself useful to successive U.S. administrations when they needed an Arab intermediary. Add to that the exotic flowing robes of visiting Saudis, a kind of desert chic, and you had an American public not terribly inclined to notice the regime’s repression of women and its support for the Islamic radicals who use the regime-funded schools and mosques to incite violence against the West.

Then came September 11, and Americans couldn’t fail to notice that 15 of the 19 terrorists involved in the attacks were Saudis. “Not a coincidence,” says the Rand report. And no surprise to students of Saudi affairs that its rulers even now continue to fund the schools and mosques that are homes to preachers of violent anti-American dogma, and have shown no inclination to cooperate with American efforts to cut off the flow of funds to terror organizations. As former Deputy Assistant Secretary of State Edward Morse puts it, “They won’t give us information, won’t help track people down, and won’t let us use our bases that are there to protect them.” Rand goes further, pointing out that “the Saudis are active at every level of the terror chain.”

Which brings us to Saudi oil. Americans have gotten the clue: the money we spend on Saudi oil not only supports the welfare state that bribes the unemployed and unemployable middle class into acquiescence to rule by unelected royals, and pays for the lush palaces of the kingdom’s thousands of princes. It is also used to make austere caves habitable for the terrorists who continue to threaten America and the West.

America often takes a long time to react to having thumbs stuck in its eye, but react it eventually will. The problem is not in the resolve to do something, but in figuring out just what to do. President Bush wants to increase domestic production of oil, and add to the Strategic Petroleum Reserve. But with even the nation’s limited storage facilities only partly filled, that strategy can’t do more than buy a few months of relief should the Saudis join a new boycott in support of Iraq, or Islamic extremists take over their country. Neither can drilling holes in the Alaska National Wildlife Refuge (ANWR), which at best can yield only enough oil at current prices merely to cover a portion of the increase that will occur in American oil consumption by 2010 or 2020, when that Alaskan oil might come on stream.

The greens, of course, want to lower demand rather than increase domestic supply. Not a bad idea, except that even on the most optimistic assumptions, economically sensible conservation cannot produce enough savings in consumption, soon enough, to make America independent of Saudi manipulation of oil markets.

Then there are the optimists who have discovered the fact that Russia sits on a lot of oil, and is rapidly increasing its production. Switch to oil from our new ally, they say, and we can afford to get tough with the Saudis. That was the thinking behind President Bush’s decision to agree to a joint energy development strategy with Russian president Vladimir Putin at their May summit in Moscow.

But Russia’s limited ability to expand output in the near- and medium-term, and the high cost of producing and transporting oil from Russian fields—something like four-to-five times the cost in Saudi Arabia—makes it an inadequate alternative should Saudi oil become unavailable to the U.S.

Besides, American planners for “regime change” in Iraq can’t be certain that Russia will continue to export at current levels when Bush decides that the time is ripe to move on Iraq, a long-time Russian client-state.

All of which is why there is mounting talk around Washington of a possible American takeover of the Saudi oil fields. Should bin Laden’s associates topple the existing regime, or even seem to be about to do so, or should the Saudis shut down their wells, “the affected world community may feel compelled to ‘liberate’ the wells of Arabia and restore production,” writes S. Fred Singer of the Hoover Institution at Stanford University. After all, that is what America did in Kuwait. But, adds Singer, this time we “might not return the wells to the original owners, who by then will have departed to hotels on the Riviera or to the Dorchester.”

Sound far-fetched? Just watch the intensity of the services commemorating the first anniversary of September 11 if you doubt that Americans aim to do whatever is necessary to win their war on terror.

This article appeared in London’s Sunday Times on August 11, 2002, and is reprinted with permission.