Subject:
Hudson Institute: Business as Usual with Saudi Arabia?
Date: Tue, 13 Aug 2002 23:20:17 -0400
From the Hudson Institute --
Business as
Usual with Saudi Arabia?
by Irwin
Stelzer
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 Pentagons
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
worlds known
oil reserves on which the Kingdom happens to sit. Secretary
of State
Colin Powell rushed to reassure the Saudi regime that Rand doesnt
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
countrys 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 Arabias 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
regimes
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 couldnt 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 wont give us information, wont help track
people down,
and wont 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 kingdoms 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 nations limited storage facilities only partly
filled, that
strategy cant 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 Bushs decision to agree to
a joint
energy development strategy with Russian president Vladimir Putin
at their May
summit in Moscow.
But Russias
limited ability to expand output in the near- and medium-term,
and the high
cost of producing and transporting oil from Russian
fieldssomething
like four-to-five times the cost in Saudi Arabiamakes it
an
inadequate alternative should Saudi oil become unavailable to the U.S.
Besides,
American planners for regime change in Iraq cant 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 Ladens 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 Londons Sunday Times on August 11, 2002, and is
reprinted
with permission.
Irwin
Stelzer is Senior Fellow and Director of Regulatory Studies for the
Hudson
Institute. He is also the U.S. economist and political columnist
for The
Sunday Times (London) and The Courier Mail (Australia), a
columnist
for The New York Post, and an honorary fellow of the Centre for
Socio-Legal
Studies for Wolfson College at Oxford University. He is the
founder and
former president of National Economic Research Associates and
a consultant
to several U.S. and United Kingdom industries on a variety of
commercial
and policy issues. He has a doctorate in economics from Cornell
University
and has taught at institutions such as Cornell, the University
of
Connecticut, New York University, and Nuffield College, Oxford.