Financial Times; August 21, 2002
Editorial comment
Handling the House of Saud
For decades US policy in the Middle East has sought to reconcile the irreconcilable. It has tried simultaneously to support Israel and defend the Arab states which are the most important suppliers of its oil, especially Saudi Arabia. Since the terrorist attacks of September 11, that balancing act has become ever more difficult to sustain.
It was bad enough in 1973, when the oil producers' boycott sent the oil price soaring fourfold, causing a huge transfer of resources from the industrialised world to the Arab states. But the reward for the west came with the massive return flow of petro- dollars, above all to the US. It also came - for good or ill - in the shape of hefty contracts for defence equipment from US and European suppliers. And since then the loyal House of Saud has been instrumental in keeping oil prices stable, acting as the swing producer in the oil market.
Evidence of large-scale disinvestment by wealthy Saudis from the US economy in recent weeks and months suggests that happy time of mutual advantage is over.
Part of the reason for the exodus is simply the decline in US financial markets. Another factor is the perception among the Saudi ruling elite that they have been demonised in the US since September 11. Removing their investments is a natural attempt to protect their wealth.
Many Americans may be tempted to say: "Good riddance." They see the undemocratic rule of the House of Saud as part of the problem in the Middle East, not the solution. But the growing divide between Washington and Riyadh is also exactly what Osama bin Laden was working for. He wanted confrontation between America and Islam. He wanted US troops to leave the holy places of Saudi Arabia. He is in danger of getting precisely what he sought.
Anti-Saudi rhetoric is widely heard in conservative circles in Washington. Back in Riyadh they are convinced that the US administration is anti-Arab and anti-Islam, not merely opposed to the terrorists of al-Qaeda. They are dismayed that Crown Prince Abdullah's peace plan for Israel has received scant attention. They are alarmed at the plans for US military intervention in neighbouring Iraq. Loose talk in Washington of Saudi Arabia as the real enemy merely encourages conspiracy theories in Riyadh that the US's real aim is to seize its oilfields.
The Saudis cannot have it all their own way. They must root out the terrorists in their midst. They must curb corruption. They will not be able to escape the pressure to open up their system. But President George W. Bush needs to consider whether it is truly in US interests to alienate Saudi Arabia now, when he is already in a deepening confrontation with the other leading powers in the Gulf, Iraq and Iran.