U.S.-Saudi Relations After Hurricane Katrina: Increased Oil Dependency and the Vulnerability of Saudi Oil Installations (JCPA-JERUSALEM CENTER FOR PUBLIC AFFAIRS) Mordechai Abir 09/18/05)
Source: http://www.jcpa.org/brief/brief005-4.htm
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America’s trade deficit with the Saudi kingdom (due largely to
the purchase of crude) is likely to amount to over $30 billion in
2005, up sharply from about $16 billion in 2004.
The conservative Abdallah has managed to win the support of the
majority of Saudis in his battle against the domestic militants
inside the Saudi kingdom who have targeted the Saudi regime.
Yet, sympathy and help for the mujahidin outside Saudi Arabia,
who have traveled in droves from the kingdom to fight the
infidel “crusaders” (Americans) and their abhorred Shi’a allies in
Iraq, are still very much alive in Arabia. The Saudis continue to
provide the ideological and even financial support for jihadi groups
outside the Saudi kingdom, as documentary evidence of Saudi
terrorist financing discloses. A senior U.S. official admitted in
July 2005 that Saudi donors are a “significant” source of funding
for the insurgency in Iraq.
In December 2004, bin Laden issued a call for attacks on the
Persian Gulf oil industries, including Saudi Arabia’s. Saudi al-
Qaeda opted to murder Western oil technicians and experts in Yanbu,
Jeddah, Riyadh, and al-Khobar.
On September 4, 2005, a three-day gun battle broke out between
security forces and 12-15 al-Qaeda mujahidin in Dammam, about 10 km
from Dhahran, capital of the Saudi oil industry. Five of the dead
militants proved to be on Riyadh’s list of 36 most wanted
terrorists. They had counterfeit documents that would have enabled
them to enter oil and security facilities. This operation foiled a
carefully prepared attack on one or several Saudi oil facilities.
A major al-Qaeda operation against one or several Saudi oil
installations could push oil prices to new heights, potentially
damaging the world economy even more than $60-$70 oil.
Saudi Oil Income from U.S. Soars
In an interview with Der Spiegel (September 11, 2005), OPEC’s acting
secretary-general, Adnan Shihab ad-Din, disclosed that the oil
cartel is to increase its quota by nearly two million bpd to about
30 million bpd at its September 19 meeting, with the biggest
contribution coming from Saudi Arabia. This move, he said, is meant
to offset the damage to the U.S. oil industry caused by Hurricane
Katrina and to reduce “record oil prices.”
In Washington on September 9, the U.S. and Saudi Arabia signed a
bilateral trade agreement that would facilitate Riyadh’s joining the
WTO (ignoring criticism that Saudi Arabia is still a pillar of the
Arab boycott against Israel). In addition to the political/energy
ramifications of the agreement, it is estimated that America’s trade
deficit with the Saudi kingdom (due largely to the purchase of
crude) is likely to amount to over $30 billion in 2005, up sharply
from about $16 billion in 2004.
Earlier this month, President Bush received Prince Bandar bin-
Sultan, Saudi Arabia’s outgoing ambassador, at the White House and
thanked him for 22 years of helping nurture the “friendship” between
his country and America. Never before have relations between
official Washington and the kingdom been as close as they are now.
This is largely attributable to Saudi Arabia’s key position in OPEC,
its enormous oil and gas reserves, and the fact that it loyally
upheld its strategic energy agreement with the U.S. as oil prices
increased while idle production capacity thinned. Indeed, Washington
no longer criticizes Riyadh for being an exporter of Wahhabi
jihadism (even though 15 out of 19 participants in the September 11
attacks were Saudis). Moreover, it seems that the Bush
administration even stopped “nagging” the Saudi regime about the
need for political reform and advancing human rights in the kingdom.
King Abdallah Escalates the Assault Against Saudi Al-Qaeda
With the help of the establishment ulama’s leadership, King Abdallah
has escalated the assault against Saudi al-Qaeda, which he unleashed
beginning in May 2003. The conservative Abdallah has managed to win
the support of the majority of Saudis in his battle against the
domestic militants who have targeted the Saudi regime, despite
popular empathy in the kingdom for al-Qaeda resulting from Wahhabi
jihadist doctrines disseminated by the ulama, who control the Saudi
education system.
Yet, sympathy and help for the mujahidin, who have traveled in
droves from the kingdom to fight the infidel “crusaders” (Americans)
and their abhorred Shi’a allies in Iraq, elsewhere in the Middle
East, and in the West, are still very much alive in Arabia. Thus,
while the Saudis are cracking down on al-Qaeda inside Saudi Arabia,
they continue to provide the ideological and even financial support
for jihadi groups outside the Saudi kingdom, as documentary evidence
of Saudi terrorist financing into early 2004 continues to disclose.1
Indeed, in mid-July 2005, Treasury Undersecretary Stuart Levey told
the U.S. Senate Committee on Banking, Housing, and Urban
Affairs, “Even today, we believe that Saudi donors may still be a
significant source of terrorist financing, including for the
insurgency in Iraq.2
Saudi Arabia in Denial
On September 7, Al-Watan, a leading Saudi daily, published “Saudi
Arabia in Denial,” a most revealing (and courageous) article by
Jamal Khashoggi, a leading Saudi journalist. In it, Khashoggi takes
to task the hypocritical Saudi ulama, whose Wahhabi jihadism is the
source of global terrorism, which, since 2003, has been directed
also against the Saud regime and its Western experts “who are
essential for the country’s oil economy.” Yet, although the great
majority of “preachers of hate” now fear openly attacking their
rulers, they nevertheless continue to encourage and abet ignorant
young Saudis in joining the international jihad beyond Saudi
Arabia’s borders. Indeed, according to most analyses, Saudis
represent a plurality, if not a clear majority, of the foreign
insurgents fighting the U.S. and coalition forces in Iraq.3
The ties between the different al-Qaeda “emirates” and the fact that
oil has become a common target to all mujahidin are now apparent. In
a recent recording posted on the Internet, Abu Mus’ab al-Zarqawi, al-
Qaeda’s leader in Iraq, denounced the Saudi rulers as despots who
wage war against mujahidin and allow Westerners “to loot the riches
of Islam’s birthplace.” Al-Zarqawi’s remarks were provoked by the
August killing of Salih al-Awfi, considered to be the head of the
Saudi al-Qaeda.
In the 1990s, Osama bin Laden made oil facilities in the Muslim
world off-limits to attack. However, following the successful anti-
al-Qaeda campaign of Crown Prince Abdallah, which wiped out a good
number of the terrorists’ “Afghani” leaders (those who had fought
against the Russians in Afghanistan), bin Laden in December 2004
issued a call for attacks on the Persian Gulf oil industries,
including Saudi Arabia’s. As operations against the heavily guarded
oil infrastructure in the kingdom’s Eastern Province (where most of
Saudi Arabia’s oil resides) proved difficult, Saudi al-Qaeda opted
to murder Western oil technicians and experts in Yanbu, Jeddah,
Riyadh, and al-Khobar (in Arabia’s Eastern Province).
Saudi Security Forces Foiled Major Al-Qaeda Attack on Saudi Oil
Facilities
In August 2005, Saudi security forces killed or incarcerated 41
mujahidin in simultaneous operations in al-Madinah, Riyadh, Arar
(near the Iraqi border), and four other locations. On September 4, a
gun battle broke out between security forces and al-Qaeda mujahidin
in Dammam, a largely Shi’a coastal town in the kingdom’s Eastern
Province located only about 10 km from Dhahran, capital of the Saudi
oil industry. For three days, Saudi security forces besieged a
rented seaside villa and fought an estimated 12-15 mujahidin. The
villa, rented two months earlier, was stocked with arms, explosives,
communication devices, food, and counterfeit documents that would
have enabled the militants to enter oil and security facilities.
Once the Saudi forces moved in for the kill, those who did not die
in the assault blew themselves up. Five of the dead militants proved
to be on Riyadh’s list of 36 most wanted terrorists (issued in
June). It appears that this operation by the Saudi security forces
foiled a carefully prepared attack on one or several oil facilities
in the region.
Projected Oil Demand Revised Downward
In pre-Katrina reports it had been suggested that oil prices may
have reached a watershed at $60-$70 a barrel. This seems to be
vindicated by an IEA report this month (among others) that revised
downward demand and economic growth projections for 2005 and 2006.
The crucial factor somewhat restraining the sharp rise in oil prices
and preventing an energy crisis was the Saudi-initiated OPEC “free-
for-all” output policy, which hiked Riyadh’s output to over 9.5
million bpd. This policy (coordinated with America) enabled the U.S.
and the OECD in general to meaningfully increase inventories and
fill its strategic petroleum reserves.
Yet, a major al-Qaeda operation against one or several Saudi oil
installations could push oil prices to new heights, potentially
damaging the world economy even more than $60-$70 oil. King
Abdallah’s success in dealing with Saudi Arabia’s homegrown al-Qaeda
cannot undo the ingrained Islamic extremism of the majority of the
kingdom’s population, which for many generations had been taught to
follow Wahhabi principles. Simultaneously, the Sauds cannot continue
to ignore the Saudi intelligentsia, middle class, and “moderate”
ulama’s increasing demand for political reform.
Not surprisingly, it seems that the U.S.-led OECD is now cognizant
that it cannot rely forever on Saudi-led OPEC to supply its
incremental oil demand and help deal with high oil prices.
Consequently, it is now pressing oil companies to invest their huge
windfall in oil exploration and substantially expanding their
refining capacity, which is the energy industry’s bottleneck. It is
also encouraging investment in the development of technologies for
greater energy efficiency and alternative power sources. Indeed,
BMW’s recent decision to join GE and Daimler-Chrysler’s endeavors to
develop hybrid engine technology and not fall behind Toyota and
Honda is a step in the right direction.
Notes
1. Lt. Col. Jonathan D. Halevi, “What Drives Saudi Arabia to Persist
in Terrorist Financing? Al-Jihad bi-al-Mal - Financial Jihad Against
the Infidels,” Jerusalem Viewpoints #531, June 1, 2005;
http://www.jcpa.org/jl/vp531.htm. Halevi refers to documentation
captured by the Israel Defense Forces that the Saudi charity al-
Haramain was transferring funds to Hamas fronts as late as February
2004.
2. “U.S. Government Calls Saudis ‘Significant Source’ of Terror
Funds,” AFX News, Forbes, July 14, 2005;
http://www.forbes.com/finance/feeds/afx/2005/07/14/afx2138132.html
3. Lisa Myers, “Who Are the Foreign Fighters in Iraq? An NBC News
Analysis Finds 55 Percent Hail from Saudi Arabia,” June 20, 2005,
http://www.msnbc.msn.com/id/8293410/. According to Reuven Paz, 61
percent are from Saudi Arabia; see “Arab Volunteers Killed in Iraq:
An Analysis,” PRISM Series of Global Jihad, no. 11/3, GLORIA Center,
IDC Herzliya, March 2005.
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