This short study examines the importance of Saudi Arabia to America as a commercial partner, in the past and for the long-term. Compared to America's other major suppliers of imported oil, the commercial relationship between the U.S. and Saudi Arabia has been remarkably balanced.

The Stakes over the Decade

Over the last decade, Saudi Arabia's overall commercial relationship with the United States has been remarkably balanced. This is in sharp contrast to all of America's other major suppliers of imported oil, where the relationships can be characterized by their deep and chronic deficits for the United States.

The American economy also benefits when Saudis visit, do business, and invest -- spending on attractions, shopping at malls, engaging local services, and investing in local and national markets. The net positives to America since the Gulf War-1 can be counted in the tens of billions of dollars added to U.S. domestic GDP, and in the tens of thousands of prized industrial and services sector jobs in communities across the country.

Ongoing Stakes

There are also intangible but nevertheless real benefits deriving from the role Saudi Arabia plays to stabilize oil markets in the face of numerous unexpected supply disruptions caused by others - whether out of malice or because of political or technical failures. For the global economy Saudi Arabia is the "Federal Reserve of oil." No other has such large capabilities to raise output in order to fill supply gaps as they occur. By paying the expense to maintain that capacity, Saudi Arabia has repeatedly cushioned the global economy from hundreds of billions of dollars of costs that would have had to be paid were oil prices allowed to spiral out of control.

Also intangible but nevertheless real is the value of the position Saudi Arabia holds with other Arab and Islamic countries. It has both the economic size and the political and cultural prestige needed to deliver the messages and establish the goals of economic and good governance reforms to its part of the world.

Stakes for the Future

International economists point to good commercial relations between nations as one of those special "win-win situations" that help all to prosper. By that most important standard, the history of the U.S.-Saudi commercial relationship has been exemplary.

But there is more. From inception, the U.S.-Saudi commercial relationship has also had important social and cultural dimensions. Commerce by definition involves people making contact with people -- for business and trading, investments, tourism, and all sorts of individual and cultural exchange -- from the serious (education or marriage) to the trivial (Bay Watch). There were and are frictions, but overall, good U.S.-Saudi commercial ties have both benefited from and helped to promote good cultural and political ties between these two important nations.

These cultural ties have shaped how the Saudis who are now leading the reforms in the Kingdom (and the region) formulate their goals and apply their efforts. Whether in regard to political responsibilities and representation, official accountability, rule of law, or individual rights, those who would transform Saudi Arabia take as their prime reference the cultural and educational experiences and ties they hold with the United States. The change they seek is evolutionary rather than revolutionary - and prudently so. Nonetheless, the present-day Saudi reformers seek to meld Saudi Arabia's deep and respected traditions with the strongest and best of America's ideals and methods.

Stakes in Play: Uncertainties in the Outlook

If past were prologue, the U.S.-Saudi relationship would appear veritably plump with potential and opportunities. But current facts are to the contrary. In the wakes of 9/11 and the Intifada-2 and on the eve of a possible war with Iraq, the U.S. Saudi commercial relationship has shrunk, and the outlook is uncertain.

The diplomats and ministries from both sides have begun to reveal more about the scope and substance of USA-KSA official cooperation. These efforts are producing good results as reflected in the many substantive anti-money laundering measures Saudi Arabia announced in December 2002, and in its most recent decisions to prosecute some 90 Saudis suspected of having ties to Al-Qaeda.

As for the long-term agenda, there is no lack of proposals aimed at strangling or killing the relationship - proposals aimed at disengagement, in a word. By these agenda the relationship would come under progressively more stringent rules, regulations, and investigations aimed at making commercial, financial, and cultural relations more difficult and costly.

The alternative agenda for the USA-KSA commercial relationship is no different than that for any of America's good commercial relationships. The formula is not rocket science. Good commercial relations involve arriving at and maintaining good working relations with the necessary modicums of confidence needed to support open and vigorous movements of goods, services, capital, and people.

Those two key phrases took on new meanings when 15 of the 19 9/11 hijackers were found to have been Saudis. Reflecting a new collaborative 9/11-awareness the good working relations between the U.S. and Saudi Arabia now go to many levels never before contemplated -- especially in the areas of regulatory oversight, investigations, prosecutions, and intelligence. Still undermining confidence, however, are the allegations raised in the courts and the media about Saudi individuals and institutions. Even the Saudis that have the closest ties to America are uncertain about how the U.S. and its various jurisdictions will eventually come to treat them.

It is clear that the U.S. and Saudi governments are working to protect the stakes in the relationship, as illustrated by the many steps Saudi Arabia announced in December 2002 toward supporting U.S. anti-money laundering aims, and in its recent Al-Qaeda prosecutions and ongoing investigations.

Through the Saudi-American Forum and other institutions