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DOES SAUDI ARABIA STILL
MATTER? DIFFERING PERSPECTIVES ON THE KINGDOM AND ITS OIL
by Shibley
Telhami and Fiona Hill,
Foreign Affairs, November/December 2002
Shibley Telhami is
Anwar Sadat Professor for Peace and Development at the
University of Maryland and Senior Fellow at the Saban Center
at the Brookings Institution. Fiona Hill is a Fellow at the
Brookings Institution and Adviser to the President of the
Eurasia Foundation.
The U.S.-Saudi
relationship has come under considerable scrutiny recently,
with some analysts questioning its centrality in U.S.
foreign policy. The discovery that many of the September 11
attackers were Saudis is partly responsible, as inquiries
into the society and political system that produced these
terrorists have yielded grim results. In these pages, for
example, Eric Rouleau has noted that "a major crisis is
now brewing in Saudi Arabia" and warned that public
anger there at both the monarchy and the United States
"poses intense risks for both countries; indeed, if not
controlled it could tear apart [their]
strategic alliance" ("Trouble in the
Kingdom," July/August 2002). Changing conditions in the
oil market and the ascendance of new suppliers such as
Russia, meanwhile, are raising a different set of questions.
Thus Edward L. Morse and James Richard have challenged the
assumption that Persian Gulf oil remains vitally important
to the United States ("The Battle for Energy
Dominance," March/April 2002).
Certainly, events
in the past year have shown the need for profound political
and economic reform in Saudi Arabia, which would bolster the
stability of the kingdom as well as the global economy. Yet
the proposition that the Persian Gulf states and Saudi
Arabia are losing their significance for the United States
misses the mark on several issues.
WHERE'S THE OIL?
The Persian Gulf
region remains central to the global oil market and will
become even more vital in the future. U.S. oil imports from
outside the Middle East will not change this fact. The
United States and the other major oil importers -- western
Europe and increasingly, as Morse and Richard note, South
and East Asia -- are all part of a single, seamless oil
market driven by supply and demand, and global demand for
oil has risen steadily over the last several decades. Oil
currently accounts for 40 percent of global energy
consumption and is not anticipated to fall much below this
share in the next 20 years.
The options
available to these oil importers are clearly determined by
price -- and therefore by those countries that hold the
reserves. More than 60 percent of world oil deposits are
clustered in and around the Persian Gulf. Saudi Arabia alone
sits on fully 25 percent of global reserves, with Iraq
following at 11 percent, and Kuwait, the United Arab
Emirates, and Iran at 9 percent each. These states' share of
the world crude market has dropped appreciably since the
1970s, as other countries have expanded their exports to
meet rising world demand. Yet this downward trend is not
likely to continue indefinitely. On the contrary, the
Persian Gulf's market share is likely to grow again purely
because of its reserve base. Outside oil production may
continue to rise over the next decade, but all major
production increases from 2010 to 2020 are projected to
come, once again, from the Persian Gulf.
It is true that
long-term trends in oil pricing are driven less by
political and military strategies and more by
market supply and demand. Yet short-term spikes, which can
have significant economic consequences, sometimes result
from political calculation, and sometimes from unanticipated
events. Only Saudi Arabia has the ability to affect these
spikes, by either holding or increasing oil supply, and the
United States greatly depends on Saudi cooperation to keep
the oil market smooth.
Russia certainly
cannot play this role, contrary to Morse and Richard's claim
that "energy resources can be used to buttress Moscow's
goal of becoming a key partner of the United States."
In the months following September 11, Moscow engaged in a
high-profile standoff with the Organization of Petroleum
Exporting Countries over the former's refusal to comply with
OPEC demands for substantial production and export cuts to
boost oil prices. This defiance threw the spotlight on
Russia and the post-Soviet states around the Caspian Sea as
alternative suppliers to the unstable states of the Persian
Gulf. The euphoria, however, was misplaced. Russia does have
considerable potential to break into some markets in Europe
and Asia as a supplemental supplier, but it cannot ever
displace the Middle East as the world's primary supplier of
oil.
For one thing, the
United States itself -- which Morse and Richard note
"will remain the single most important force in the oil
market," thanks to its ravenous appetite for petroleum
-- currently purchases less than three percent of its oil
from Russia and the Caspian states. Even in the European and
Asian markets where Russia has a greater foothold, an
increase in Russian oil production from the current seven
million barrels per day (bpd) to projected levels of nine or
ten million bpd, would still not make Russia the dominant
supplier.
Moreover, Russia's
proven oil reserves constitute just five percent of the
world total -- considerably smaller than those of the key
Persian Gulf countries. The Russians do anticipate finding
major new reserves on Sakhalin Island off their eastern
coast, in the "northern seas" of the Arctic
Circle, and in certain fields in the Russian sector of the
Caspian Sea. As for the other post-Soviet states,
substantial new reserves certainly lie in the Caspian basin,
already equivalent in size to those under the North Sea. And
more finds are expected in Kazakhstan, where the new
Kashagan offshore field is now estimated to contain around
22 billion barrels of oil -- more than twice the size of the
Prudhoe Bay reserves in Alaska. But even after adding a
field of this size to the existing reserves and projected
Russian findings, Russia and the Caspian basin together will
still never have enough oil to displace Saudi Arabia's 264.2
billion barrels of proven reserves.
Finally, Saudi
Arabia has a trump card that Russia does not: spare
production capacity. Morse and Richard rightly
acknowledge that the kingdom's extra reserves, to be used
only as a last resort during a crisis in the oil market,
make "policymakers elsewhere beholden to Riyadh for
energy security" and form "the centerpiece of the
U.S.-Saudi relationship." Russia, on the other hand,
produces and exports at maximum capacity and is likely to
continue to do so -- a fact that has begun to generate some
anxiety domestically. To make matters worse, a recent
Russian government energy report indicates that if current
oil-extraction levels continue and new technologies do not
bring additional reserves into production, Russia can expect
to have depleted its current reserves by 2040. This is a
sobering conclusion for an economy that remains heavily
dependent on energy revenues and subsidies.
ON GUARD IN THE GULF
U.S. strategic
priorities supply a second reason why Saudi Arabia will
remain important to the United States. For half a century,
the United States has made Persian Gulf oil a primary
security interest, and this emphasis is unlikely to
dissipate in this decade. The conventional view of U.S.
policy in the Persian Gulf is that American strategy and
military posture are based primarily on ensuring an
uninterrupted flow of oil at reasonable prices. But, as U.S.
government documents declassified over the last several
years show, the strategy has also focused on preventing
hostile forces from seizing and establishing
control of Persian Gulf petroleum. From 1949 to the present,
American planners have worried that a hostile state may gain
too much wealth and power by controlling the dominant share
of the world's oil supply -- and thus become more
threatening to the United States. U.S. policy toward the
region has thus sought the "denial" of oil to
enemies while assuring its flow to the West.
Indeed, in 1949,
the fear of a Soviet seizure of oil resources in the Persian
Gulf led U.S. policymakers to plan the destruction of
regional oil facilities. In coordination with the British
government and U.S. and British oil companies, but without
the knowledge of local Arab governments, President Harry
Truman approved a detailed plan -- described in a National
Security Council directive known as NSC 26/2 and later
supplemented by a series of additional NSC orders -- to
store explosives near Persian Gulf oil fields. As a last
resort in the event of an imminent Soviet invasion, oil
installations and refineries would be blown up and the
reserves plugged to keep the oil out of Moscow's hands.
The fear that the
Soviet Union could control all that oil was so great that
the Truman administration even considered deploying
radiological weapons to destroy the oil fields before the
Soviets could access them. That option was rejected in 1950,
and the CIA study that led to this decision reveals the dual
logic of U.S. interests: denying the use of Persian Gulf oil
to the enemy while at the same time preserving the region's
oil for future use by the West. The CIA's conclusion, as
detailed in NSC 26/3, dated June 29, 1950, noted,
Denial of the wells
by radiological means can be accomplished to prevent an
enemy from utilizing the oil fields, but it could not
prevent him from forcing "expendable" Arabs to
enter contaminated areas to open well heads and deplete the
reservoirs. Therefore, aside from other effects on the Arab
population, it is not considered that radiological means are
practicable as a conservation measure.
If the Red Army
ever did invade the Persian Gulf, the report continued, the
United States needed to ensure the "preservation of the
resources for our own use after our reoccupation."
In the 1950s, this
calculation led to a strategy of using more
conventional means to prevent the Soviets from seizing
Persian Gulf oil. Explosives were moved to the region and
stored near oil fields. Although the State Department
apparently expressed reservations that the plan was not
prepared to defend local
governments, the fear of Soviet control overrode these
concerns. In 1957, in response to increased instability in
the wake of the Suez crisis, the Eisenhower administration
reinforced and expanded the logic of this strategy. With
many friends of the West threatened by the rise of
pan-Arabism, championed by Egyptian President Gamal Abdel
Nasser, the United States grew concerned that unfriendly
governments would emerge in the region. This fear led
Eisenhower to expand the denial policy to include not only
threatening external powers, but also hostile regional
regimes.
Today, Iraq and, to
some extent, Iran have replaced the Soviet Union as the
hostile powers in U.S. thinking (though in this case they
already control some of the regional oil reserves). It is
clear that one of the principal American reasons for going
to war against Iraq after its invasion of Kuwait in 1990 was
the belief that an ambitious and ruthless Saddam Hussein
would be empowered and emboldened if left in control of so
much of the world's oil wealth. Certainly, the even greater
concern that he might ultimately be in a position to seize
control of Saudi Arabia's
oil fields was also a strong driving force in
American policy, regardless of the U.S. political commitment
to the Saudi regime. Given the continued assumption in
Washington that Iraq under Saddam and an Iran that the State
Department calls "the most active state sponsor of
terrorism" threaten American interests, it is unlikely
that Washington will allow either regime to expand its oil
wealth and, thereby, its power.
STRATEGIC COMPETITORS
In the coming
years, the United States is likely to face additional
complications in the Persian Gulf as the world becomes
increasingly dependent on Middle Eastern oil, and as new
countries vie to protect their own interests in the region's
supply. China is a case in point. Oil now accounts for
almost 30 percent of Chinese energy consumption. The country
imports 60 percent of its oil from the Persian Gulf, and
projections indicate that in the next two decades, this
figure could rise to 90 percent. Economic interests and
concerns over energy security could thus easily lead to
increased Chinese political involvement in the region. China
has already begun to invest in energy exploration in Iran
and has
made efforts to negotiate rights to develop an
oil field in Iraq.
(Beijing's interest in Caspian energy reserves
has also translated into political involvement in Central
Asia -- most notably through the creation of the Shanghai
Cooperation Organization with Russia and four of the Central
Asian states, including Kazakhstan.) Yet China is just one
reminder that in the next decade, the United States will not
necessarily find it so easy to influence and restrain the
activities of all the interested parties in the Persian
Gulf.
Given America's
ongoing security interest in the Persian Gulf, it is highly
likely that the U.S. military will retain a large presence
in the region. Washington must therefore continue to place
high priority on sustaining favorable relations with Riyadh,
since Saudi approval and cooperation will remain essential
to any continued American military presence. It is certainly
possible that the United States will reduce the number of
troops it keeps in Saudi Arabia, or will at least have them
assume a lower profile, but it is hard to imagine that, with
the exception
of Kuwait, any of the smaller members of the
Gulf Cooperation Council (which comprises Bahrain, Kuwait,
Oman, Qatar, Saudi Arabia, and the United Arab Emirates)
could afford to host large American bases without Saudi
acquiescence. In addition, U.S. options would be
significantly handicapped if Saudi Arabia were to deny
overflight rights to U.S. military aircraft, or prohibit
ground troops from launching operations from Saudi soil in
the case of a war with Iraq.
And finally, the
key role that Saudi Arabia plays psychologically and
symbolically in the lives of Muslims worldwide cannot be
underestimated. It is one thing to have radical nonstate
groups that advocate and employ violence against the United
States; it would be a very different matter to have a
radical government employ the pulpit of Mecca, where
millions come every year on pilgrimage, to set a hostile
tone in the name of Islam. This
prospect alone -- which seems quite realistic
in Rouleau's portrait of "the most rigorous theocracy
in the Islamic world," where Islamic radicals
"have called into question the very legitimacy of the
al Saud dynasty" -- should be enough to convince
Americans that a close U.S.-Saudi relationship is in their
best interest.
AN ALLY YOU CAN'T REFUSE
In the end, it is
clear that the United States has an important interest in
continuing strategic cooperation with Saudi Arabia. Yet
critics of U.S.-Saudi relations, although mistaken in
suggesting that the United States no longer needs Saudi
Arabia, do highlight some real areas of concern. Both sides
must now work hard to regain the trust of each other's
publics and policymakers. The Saudis will need to reform
their political, educational, and economic system, not only
for their own sake, but also to improve the relationship
between Saudi Arabia and the rest of the world.
If reform is rejected, then new pressures from
the young, restless
majority -- many of whom are unemployed and
some of whom are increasingly radicalized -- will pose
serious challenges internally and externally.
Yet those Americans
calling for reform in Saudi Arabia must bear in mind that
political change cannot be imposed from the outside, and
especially not by the United States. The process will be
slow. In fact, a gradual approach is the only guarantee of
political change: no reform process is likely to produce a
positive, stable outcome without the cooperation of the
monarchy, and only sustained, gradual reforms will be
palatable and not immediately threatening to the current
government.
The changes should
begin with the educational and economic systems. In terms of
education, Rouleau's emphasis on the urgent need for broad
reforms in Saudi Arabia has now been bolstered by a recent
United Nations report on human development in the Arab
world. This sobering study, which gave the region the lowest
"freedom score" in the world (based on research
conducted in the late 1990s), highlighted the Arab states'
minuscule expenditures on scientific research and
technological development. By neglecting to invest in
these areas, Riyadh is wasting the economic potential of its
population and ignoring an opportunity to provide jobs and
livelihoods to frustrated young Saudis who might otherwise
turn toward extremism. In addition, the Saudis will have to
scrutinize their international aid programs to Islamic
schools and groups outside the country that may ultimately
threaten the regime's interests.
Economic reforms
must inevitably extend to the Saudi oil sector, where Morse
and Richard have a point in contrasting Riyadh's rigid state
control with Russia's more liberalized environment. Although
Saudi Crown Prince Abdullah has shown initiative in allowing
some international investment in the Saudi oil industry, he
is playing catch-up with Russia. Russian oil companies
operate more freely as private, or semiprivate, entities and
are now attempting to transform themselves into
international players by acquiring their own international
reserve bases and downstream operations, including in the
Middle East and the United States.
Finally, the United
States must reconsider its own policy priorities in the
Middle East, beyond the U.S.-Saudi relationship, if it hopes
to help promote a stable environment in Saudi Arabia that
will protect U.S. strategic interests. Opinion surveys in
the kingdom underscore that public perceptions are
increasingly formed by the media outside Saudi Arabia rather
than by the official government-controlled press. And
attitudes toward the United States are shaped less by what
America stands for than by concrete American policies.
Indeed, in an early 2002 survey, 86 percent
of Saudi elites and 59 percent of the general
public indicated that their frustrations with the United
States were based on its policies, not on American values.
First and foremost
among Saudi concerns is U.S. policy toward the
Arab-Israeli conflict. In a survey conducted
in spring 2001, 63 percent of Saudis characterized the
Palestinian situation as "the single most important
issue to them personally," and another 20 percent
ranked it among the top three. It is this inescapable
domestic reality that drove Prince Abdullah toward a new
attempt to seek a comprehensive Arab-Israeli peace.
From the American
point of view, the events of the past year have
undermined the proposition that the
Arab-Israeli conflict can be
completely separated from U.S. strategy in the
Persian Gulf. The United States must design a public
diplomacy strategy that reaches out to the region's public
and addresses the unfortunate misperceptions that have taken
root there. And ultimately, regardless of how U.S.
policymakers choose to deal with Iraq, the most effective
way to reduce the tension between the United States and
Saudi Arabia is to push forward with Arab-Israeli
peacemaking. The United States must do these things because,
as long as the world remains dependent on oil, it simply
cannot make do without Saudi Arabia.
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