Militants strike at Saudis' weakest point
As oil prices become ever more volatile, Mark Hollingsworth examines US dependence on the increasingly vulnerable regime
06 June 2004
Saudi police and militants fought a running gun battle in the Red Sea port of Jeddah early yesterday, emphasising the fragility of the world's biggest oil exporter a week after a major terror assault killed 22 people in Khobar, on the other side of the country.
A spate of attacks on Western expatriates in Saudi Arabia contributed to a sharp spike in world oil prices last week before Opec, the Organisation of Petroleum Exporting Countries, of which Saudi is the largest member, promised to increase production. Little was known about the latest clash, in which police and militants exchanged fire from moving cars, but the attackers were said to have escaped. "Police are still hunting them down," a security source told Reuters.
On Friday, al-Qa'ida's top leader in the kingdom, Abdul Aziz al-Moqrin, called on Saudis to support the militants' campaign to topple the monarchy. He praised an al-Qa'ida attack in the city of Yanbu in early May, the killing of a German in Riyadh two weeks ago and Wednesday's attack on military personnel near Riyadh. It also emerged that two US Air Force officers were wounded in last weekend's carnage in Khobar, the centre of the oil industry in eastern Saudi Arabia, highlighting the mutual dependence of the Saudi royal family and America.
The recent violence shows that al-Qa'ida is now carefully targeting oil firms and Westerners. The police are arresting more and more Islamic militants. Their efforts, however, are impeded by influential clerics praising suicide bombers as well as by some Saudi National Guard members providing inside help to al-Qa'ida terrorists. Such collusion was first revealed by The Independent on Sunday when it reported allegations that some National Guard officers provided intelligence to the bombers of a US housing compound in Riyadh last year.
The militants are all too aware that no country is more dependent on cheap Saudi oil than the US. The House of Saud has repeatedly wielded its surplus oil capacity as a political weapon. Less than 24 hours after the September 2001 attacks on New York and Washington, the Saudi royal family authorised the distribution of nine million barrels of oil to the United States over two weeks. This ensured that America experienced only a slight inflation increase and stabilised its economy after the most devastating terrorist atrocity in its history. During the 1991 Gulf War, the country produced an extra five million barrels a day. The Saudis also keep an estimated $1 trillion (£550bn) on deposit in US banks and another $1 trillion or so in the stock market. If they were to suddenly withdraw their investments, it would have a catastrophic impact on the US economy.
In return, the regime expects the US and Britain to protect them from Islamic insurgents and neighbouring states, sell them weapons in deals producing huge kickbacks to senior royals and turn a blind eye to serious human rights abuses. But the sudden vulnerability of the oil infrastructure has placed this insidious relationship under threat.
"Although Saudi Arabia has more than 80 active oil and natural gas fields and a thousand working wells, half its proven oil reserves are contained in only eight fields," said Robert Baer, who served for 21 years with the CIA's Directorate of Operations in the Middle East. "Confidential scenarios have suggested that if terrorists were simultaneously to hit only a few sensitive points from these eight fields, they could effectively put the Saudis out of the oil business for about two years."
That could conceivably mean crude oil, which has been trading at more than $40 per barrel, doubling or even trebling in price. Recent Saudi assurances that the oilfields are well protected are sceptically received by expatriates who had also been assured of their personal safety.
For Mr Baer the West has only itself to blame. In his book Sleeping with the Devil, he argues that the US and Britain armed and supported "an increasingly bankrupt, criminal, dysfunctional and out-of-touch royal family that is hated by the people it rules and by the nations that surround its kingdom". The unwillingness to criticise the corruption and human rights abuses of many senior royals, combined with the American military presence in Saudi Arabia, has fuelled support for Islamic militants like Osama bin Laden. Attempts to appease opponents of the House of Saud with a moderate dose of democracy could backfire disastrously: if an election were held today, in all likelihood Bin Laden would win by a landslide.
The House of Saud has been built on a fragile, paradoxical foundation: while it depends on the secular, materialist West for its security and wealth, it also promotes a strict Islamic regime that ironically has created the conditions for al-Qa'ida to thrive. "They are in denial mode," a former British ambassador in Riyadh told me.
By ceding authority to clerics and religious police loyal to the rigid Wahhabi sect of Sunni Islam, the royal family has allowed education and the press to fall under the control of fundamentalist zealots. The imposition of such an extreme Islamic creed in schools and universities has created a large pool of recruits for al-Qa'ida, particularly among disaffected, unemployed youth, who view the royals as remote, corrupt and hypocritical, despising their drinking and cocaine binges, their partying with prostitutes and their abstraction of billions of dollars from the state budget. Combined with the regime's supine deference to the Americans, this fury has created a worldwide army today of 18,000 al-Qa'ida operatives, according to the International Institute of Strategic Studies.
The 9/11 tragedy should have been a wake-up call to the US, since 15 of the 19 hijackers were Saudi nationals. During the previous decade Saudi Arabia had transferred over $500m to al-Qa'ida via Islamic charities, according to a UN Security Council report, but when Saudi intelligence refused to allow the FBI to interview Saudi suspects, President Bush did nothing.
The Bush family's financial links to the Saudi royal family are exemplified by George Bush Snr's lucrative consultancy with the Carlyle Group, a multibillion-dollar investment firm whose raison d'être is business with Saudi Arabia. And the Saudi ambassador to Washington, Prince Bandar, has spent tens of millions of dollars on Washington lobbyists, lawyers and PR consultants to peddle influence and deny that his country funds Islamic terrorism.
Some argue that America can now afford to be far less dependent on Saudi oil, pointing out that it provides only 18 per cent of the crude oil the US consumes. But Saudi not only exports more oil than any other country, it has more reserves - 25 per cent of world supplies - and possesses the world's only important surplus production capacity. It remains the world's most powerful low-cost oil state. By merely turning on or off the taps, it possesses considerable economic power, and hence global political influence.
That gives the Saudi royals real negotiating power when they deal with the Oval Office. Washington still needs the House of Saud as much as they need Washington to preserve their power and wealth.
Mark Hollingsworth is writing a book on the Saudi royal family
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