Fall of the House of Saud
Robert Baer, a retired 21-year career CIA operative, has written a lengthy article published in the May issue of The Atlantic Monthly. It is available on the Web at the Freedom of Information site which is where the following link takes you. The argument he develops is that Saudi Arabia can not continue much longer as we know it.
The piece opens with a statement that only the most blind partisan would challenge:
In the decades after World War II the United States and the rest of the industrialized world developed a deep and irrevocable dependence on oil from Saudi Arabia . . .
This dependence creates concern from a number of perspectives, not least being the vulnerability of the Saudi oil producing apparatus, from well to pump to refinery to shipment points, to attack by terrorists no more sophisticated than those who put a hole into the USS Cole. A well executed attack could bring the entire operation to a halt; a partial success could reduce Saudi production 30% or more.
For the first two months after a moderate to severe attack on Abqaiq, production there would slow from an average of 6.8 million barrels a day to one million barrels, a loss equivalent to one third of America's daily consumption of crude oil. For seven months following the attack, daily production would remain as much as four million barrels below normal--a reduction roughly equal to what all of the OPEC partners were able to effect during their 1973 embargo.Saudi Arabia has the world's only important surplus production capacity--two million barrels a day. This keeps the world market liquid. Not only that, but because the Saudis more or less determine the price of oil globally by deciding how much oil to produce, even countries that don't buy Saudi oil would be vulnerable if the flow of that oil were disrupted.
Conditions inside Saudi Arabia have deteriorated over the past two decades, a combination of growing population, reduced market value of oil, and increased corruption of the extended family of princes.
In the air in Riyadh and Jidda is the conviction that oil money has corrupted the ruling family beyond redemption, even as the general population has grown and gotten poorer; that the country's leaders have failed to protect fellow Muslims in Palestine and elsewhere; and that the House of Saud has let Islam be humiliated--that, in short, the country needs a radical "purification." . . .. . . Per capita income in Saudi Arabia fell from $28,600 in 1981 to $6,800 in 2001. The country's birth rate has soared, becoming one of the highest in the world. Its police force is corrupt, and the rule of law is a sham.
Since 1995 when King Fahd suffered a near-fatal stroke the intensity of the maneuvering within the Saudis has risen dramatically.
What the family knew and the doctors didn't was that Crown Prince Abdullah had long been eager to take power. The only way to keep him at bay was to keep Fahd alive--God willing, until Abdullah died. . . .. . . As a reformer, Abdullah was kept out of the tight circle that gathered around Fahd after his stroke. . . .
Succession is not that of the western primogeniture, rather it is settled among the senior princes.
By tradition, senior princes come to a consensus on succession, usually choosing one from their ranks who is thought to have the necessary experience and wisdom. So far the system had served the royal family well, even though Abdullah had become a gadfly, but now Fahd's brothers were afraid that Abdul Aziz was trying to circumvent custom and place himself higher in the line of succession. . .. . . What really worried some members of his family was that Abdul Aziz was funding radical Wahhabi causes and was gaining strength and popularity as a result. They had little doubt that money was going to clerics and causes that were associated with Osama bin Laden
The numbers in the House of Saud are growing so that they may double in the next decade while the per capita income in the kingdom is now a quarter of what it was 20 years ago. Moreover, those Saudi men taking graduate degrees are not studying engineering, computer science, and the like, they are studying Islamic studies.
All the while, throughout the 1990s, the royal family kept growing and growing. . . .. . . In 1981, when the entire kingdom was in effect being put on the dole, oil was selling at nearly $40 a barrel, and the annual per capita income was $28,600. A decade later, just before Iraq invaded Kuwait, refiners were able to buy oil for about $15 a barrel. The Gulf War sent prices back up to about $36 a barrel before they quickly fell. Today a barrel of oil once again fetches around $40, but twenty years' worth of inflation, combined with a population explosion, has brought per capita income down to below $7,000.
. . . . Younger Saudis are being educated to take part in a world that will exist only if the Wahhabi jihadists succeed in turning back the clock not just a few decades but a few centuries.
And even though the American government knew it was going on, no one called out that
Saudi Arabia was sending as many as 150,000 barrels of oil a day to Afghanistan and Pakistan in off-budget foreign aid that had a value of something like $2 million a day. Furthermore, the United States had known since 1994 that the Saudis were supporting Pakistan's nuclear development program, ultimately contributing upwards of a billion dollars. More recently, because Saudi law does not allow foreign agencies to directly question Saudi citizens, the FBI has not been allowed to interview Saudi suspects, including the families of the fifteen Saudi hijackers, about the 9/11 attacks.
The list of past government officials serving on one board or another with close oil connections with the Saudis is a who’s who. Consider those associated with just one such,
Carlyle Group --a private investment company, founded in 1987, that almost since its inception has been conducting immensely profitable business with Saudi Arabia. From 1993 to 2002 the chairman of Carlyle was Frank Carlucci, who served first as Ronald Reagan's National Security Adviser and then as his Secretary of Defense. Carlyle's senior counselor is James Baker, who served as Secretary of State under George H.W. Bush--who in his post-presidency also happens to be a Carlyle adviser. Others who hang their hats at Carlyle include Arthur Levitt, the head of the Securities and Exchange Commission under Bill Clinton, and now Carlyle's senior adviser; John Major, a former Prime Minister of Great Britain and the current chairman of Carlyle Europe; William Kennard, who chaired the Federal Communications Commission during the second Clinton Administration; Afsaneh Mashayekhi Beschloss, a former treasurer and chief investment officer of the World Bank; and Richard Darman, who ran the Office of Management and Budget under the first President Bush and also served as deputy secretary of the treasury under Reagan. . . .. . . Just to make sure that no one upsets the workings of this system, perhaps by meddling in internal Saudi affairs, Saudi Arabia now keeps possibly as much as a trillion dollars on deposit in U.S. banks--an agreement worked out in the early eighties by the Reagan Administration, in an effort to get the Saudis to offset U.S. government budget deficits. The Saudis hold another trillion dollars or so in the U.S. stock market. This gives them a remarkable degree of leverage in Washington. If they were suddenly to withdraw all their holdings in this country, the effect, though perhaps not as catastrophic as having a major source of oil shut down, would still be devastating.
Baer begins his concluding section with an assertion as direct as that with which he opened the article and specifies five realities that we and they wish to ignore.
Saudi Arabia today is a mess, and it is our mess. We made it the private storage tank for our oil reserves. We reaped the benefits of a steady petroleum supply at a discounted price, and we grabbed at every available Saudi petrodollar. We taught the Saudis exactly what was expected of them. We cannot walk away morally from the consequences of this behavior--and we really can't walk away economically. . . .o Saudi Arabia controls the largest share of the world's oil and serves as the market regulator for the global petroleum industry.
o No country consumes more oil, and is more dependent on Saudi oil, than the United States.
o The United States and the rest of the industrialized world are therefore absolutely dependent on Saudi Arabia's oil reserves, and will be for decades to come.
o If the Saudi oil spigot is shut off, by terrorism or by political revolution, the effect on the global economy, and particularly on the economy of the United States, will be devastating.
o Saudi oil is controlled by 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.
Signs of impending disaster are everywhere, but the House of Saud has chosen to pray that the moment of reckoning will not come soon--and the United States has chosen to look away. So nothing changes: . . .
This article is not something to approach lightly. But it offers a blunt assessment of how we have gotten to our present status and provides important detail that must be taken into account in making decisions about our policy in Saudi Arabia. The question asked in the "Great Decisions" brochure has already been overtaken by events – "How will the U.S.-Saudi relationship be affected by the war on terrorism and a possible war against Iraq?" Will the Iraq invasion hasten the collapse that Baer feels must come within three years? Or will it prop the house up for a few years more?
Posted by Donald Douglas at June 1, 2003 12:46 PM