196. Report Prepared by the Ambassador to Saudi Arabia (West)1

SAUDI ARABIA—THE LESSON OF IRAN—AFTER SIX MONTHS

Summary

The events in Iran have brought to the Saudi leadership a realization of two facts: an absolute monarchy is vulnerable and the U.S. and its Western allies are absolutely dependent on imported oil, of which SAG is a major supplier. This realization is causing SAG to be particularly careful about getting too far ahead of its people. It is also beginning to regard the U.S.-Saudi special relationship, generally defined as oil for security, as being somewhat unbalanced in the U.S. favor and is beginning to expect more consideration and more concessions from the U.S. in return for oil.

Introduction

The fall of Iran has made clear to the rulers of Saudi Arabia two basic facts which are more and more influencing SAG foreign policy:

1) The vulnerability of an absolute monarchy, regardless of its tenure, tradition, or outward appearance of stability and no matter how numerous, well trained, and well equipped the armed forces and internal security may be.

b) The absolute dependence of the United States and its Western allies on imported oil, of which SAG is the chief supplier.

The appreciation of these basic lessons has already had a noticeable effect on SAG’s bilateral relationship with the U.S. They will be increasingly important considerations in the development and direction of SAG’s policies over the coming months. It is, in our judgment, imperative that the USG policy not lose sight of these considerations.

These lessons from Iran’s fall are in a sense a strange paradox to Saudi Arabia: the first tells the Saudis how weak they are; the second [Page 642] how strong they are, especially in their relations with the western world.

Vulnerability

The Shah, with the best trained, best equipped armed forces in the area, fell to a group of untrained and ill-equipped urban revolutionaries. His U.S. arms together with the friendship they implied were useless to sustain him in power. Friendship with the U.S., in fact, was one of the Shah’s most vulnerable points, as it became a rallying cry for Khomeini and the masses as they toppled the Peacock Throne.

When the Shah fell in February 1979, the question immediately posed in the highest levels of the U.S. Government was: “Will Saudi Arabia be next?” That question was likewise being asked, debated, and studied at every level in Saudi Arabia with a degree of concern understandably greater than even in the U.S. The question was even similar in form: “Can it happen here?”

A stock reply developed almost immediately to that question—spontaneously we believe, but so uniform as to constitute what we began to term as the party line from both government and private sector individuals: “No, we are different . . . there is no real conflict between the religious and civil authorities . . . the Shah was vain and arrogant, insensitive to the masses, while our rulers are close to the people and responsive to them . . . we have no political prisoners or secret police, yes, there is some corruption, but we’re taking steps to correct it.”

After a time, one had the impression that the Saudis were trying as hard to convince themselves as they were to persuade us that “it can’t happen here.” As the ruling hierarchy began to realize that “it can happen here,” a resolve began to develop: “We won’t let it happen here.” That determination, which is basically a strong manifestation of the survival instincts of the Saud family, has increased and has begun to shape Saudi policy, both foreign and domestic. The final bit of evidence, if one was needed, was the assigning of internal stability as the first priority of SAG policy for the new two-year plan.

How will the Saudi concern over its internal security situation affect its relationship with the U.S.? No one, not even the Saudis, can give a definite answer to that question now. But here are some general observations and principles which we believe valid:

a) They do not like or trust South Yemen, Libya, and Iraq (approximately in that descending order). While they will continue to support the PLO financially, their sympathy for that group and its leadership has noticeably cooled since the PLO’s attacks on the Saudi Royal Family at Baghdad II.2 However, the Saudis will avoid at all costs any breach [Page 643] with other Arab states, including the Rejectionists3 and those definitely under Soviet influence.

b) The Saudis realize more than ever that the political leadership of a traditional Muslim society must not get too far ahead of its people’s religious traditions. They will go to extreme lengths to avoid any major altercation with religious leaders and will be particularly careful in the application of Islamic laws and principles. This may create some difficulties with respect to the non-Muslim expatriate population and could exacerbate the problem of U.S. human and civil rights issues (especially concerning the rights of women) as applied to our bilateral relationship.

c) They will avoid, to the extent possible, any appearance of (a) relying on the U.S. for protection, and (b) of being a U.S. client state and thereby bowing to U.S. wishes and pressures. This does not mean that they want any lessening of the U.S. security commitment to them, but it does mean that they want the U.S. connection to be one of low visibility. They do not want a U.S. military presence except in case of direct attack by the USSR or one of its surrogates. They want U.S. military equipment for themselves and for designated neighbors. However, they want to maintain a measure of control over Saudi-financed U.S. military assistance to other Peninsula states, e.g. YAR, Oman, and Bahrain. This means a say in the amount, timing and composition of such assistance.

d) Although still a minority, more Saudis are arguing now that some accommodation with the USSR may be necessary, and there seems to be some receptiveness to Soviet overtures to improve relations. This view still, however, contrasts sharply with the basic Saudi antipathy for atheism and communism in general and the Soviet Union in particular. However, it is more likely today that the Saudis would support bringing the Soviet Union back into the Middle East peace process if the U.S. is seen as either unable or unwilling to pressure Israel into making the concessions they see as necessary for a comprehensive peace. Response to economic overtures from the Soviet Union are also possible in the future.

U.S. Dependence on Saudi Oil

The recent shortfall in world oil supplies resulting from the disruption of Iranian oil production has underlined for the Saudis the absolute dependence of the United States and our Western allies on imported oil. The Saudi leadership increasingly considers that the special relationship between the U.S. and Saudi Arabia is unbalanced and that, [Page 644] at least in the short run, the U.S. needs favorable Saudi oil policies more than Saudi Arabia needs the U.S. for security. The Saudi perception of our lopsided dependence on their oil has strengthened the position within the Saudi hierarchy of those (1) who favor conservation of oil resources as the investment for Saudi Arabia’s future prosperity and (b) who argue that Saudi Arabia should gain more concessions from us in the Middle East peace issues, in supply of military equipment, in investment restrictions in the U.S., and in other areas of our bilateral relationship.

The Saudis have come a long way from threatening the blunt use of the oil weapon as in the 1973 oil boycott. Instead of blindly threatening to cut off all oil supplies to the U.S., the Saudis have become more aware of their political leverage implicit in questions of oil pricing and production levels. In this era of short supply, the Saudis do not have the power to dictate oil prices to fellow OPEC leaders, but they have clearly staked out the most moderate position among the key OPEC countries. They have put themselves in a position where Saudi silence on oil pricing questions alone would yield center stage to those producers demanding that no restraints be placed on escalating oil prices. The Saudis further see themselves as the only country that has the ability in the short term to increase production enough to make up for the loss of Iranian supplies as well as provide the quantities required to fuel continued world economic expansion.

The Saudis have for years been telling the industrial leaders of the West to reduce oil consumption by conservation and the development of new energy sources. They are now in the enviable position of being able to sit smugly and hold production to current levels. As in the question of pricing, a passive policy by the Saudis on production will have severe economic ramifications for the health of the world economy. While there is a recognition that continued prosperity in the West is advantageous to the Saudis (as a protection of their overseas investments and a counter to communist expansion), they will increasingly expect concessions from the United States in exchange for their playing an aggressive role in solving the current energy crisis. For example, there is, in our judgment, a strong but unspoken link between the recent Saudi announcement that they would temporarily increase oil production and their expectations of progress in the Middle East peace process. If within the next six months there is no progress in the autonomy negotiations and recognition of an Arab status for Jerusalem, there will be exceptionally strong pressures within the Saudi hierarchy for a return to the 8.5 mbd level of oil production. There will also be strong pressure for Saudi Arabia to accommodate itself to a unified and higher price for oil at the December OPEC meeting. Marginal progress in the peace process may be matched by marginal cooperation in energy questions.

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In the same light, the Saudis are expected to be less accommodating to the constant, if sometimes minor, irritations in our bilateral relations. U.S. refusal to pay interest on FMS deposits, a passive U.S. role in the I.A.M. suit in a California court against the OPEC countries,4 U.S. insistence on the application of American human rights standards in a conservative Muslim society (e.g. the Bendix-Siyanco case where the U.S. appears to be insisting that the Saudi Government employ women as instructors for their military),5 revisions in the interpretation of American boycott legislation, unfavorable U.S. tax regulations affecting American investments in Saudi Arabia, and the Treasury Department’s interpretation of the Ribicoff anti-boycott amendment to the 1976 tax law6 are all examples of the sort of problems that irritate the Saudis.7 Until recently, the Saudis were more willing to work with us on compromises on such issues. Saudi concessions were seen as part of the special relationship with the U.S. Now they are quick to point out that those strains in the U.S.-Saudi relationship which reflect purely American domestic considerations are Washington’s concerns, not Riyadh’s. In order for the U.S. realistically to expect continued cooperation on oil, the Saudis expect the U.S. to find solutions to such irritants without demanding concessions from them.

Conclusions

Basic to the understanding of the Saudi system (which is in effect the Saud family), is the fact that they are survivors. The human instinct and capacity for self-preservation has been dominant throughout their 400-year history. Their current active leadership—Fahd, Abdallah, Sultan, and Saud—have either through genetic or cultural heritage, or both, arrived at today’s crises with a full measure of the strong will and native ability necessary to survive even in today’s complex world.

Therefore, the balancing of strength against weakness by the Saud family with the ultimate goal of survival is the interesting scenario unfolding now in Saudi Arabia. The effects of this scenario on the U.S. are substantial, should be recognized, and should govern to a great [Page 646] degree our own responses in our relationship with SAG over the next few months.

John C. West Ambassador
  1. Source: Carter Library, National Security Affairs, Brzezinski Material, Country File, Box 67, Saudi Arabia: 4–7/79. Confidential. Carter initialed the first page of the report, indicating that he saw it. West sent the report to Carter under a 2-page handwritten letter dated July 22. In it, he commended the President on his recent personnel moves and noted Robert Strauss’s trip to Saudi Arabia. Brzezinski forwarded both the letter and the report to Carter under an August 10 memorandum, noting: “The summary on the first page of the assessment provides a good synopsis of the contents.” (Ibid.) Strauss made his first trip to the Middle East July 1–7, during which he met with Fahd in Riyadh. See Foreign Relations, 1977–1980, vol. IX, Arab-Israeli Dispute, August 1978–December 1980, Document 271.
  2. See footnote 4, Document 191.
  3. See footnote 6, Document 17.
  4. In 1978, the International Association of Machinists and Aerospace Workers brought suit against OPEC in Los Angeles seeking damages for the oil embargo of 1973.
  5. The Bendix-Siyanco case involved “the disapproval of three female applicants for positions as English language instructors at the Taif Ordnance School.” (Telegram 4060 from Jidda, May 29; National Archives, RG 59, Central Foreign Policy File, D790242–0980) More information on this case is in telegram 153400 to Jidda, June 15; National Archives, RG 59, Central Foreign Policy File, P850027–2318.
  6. Reference is to the anti-boycott provisions (known as the Ribicoff Amendment) of the Tax Reform Act of 1976, which Ford signed on October 4, 1976. This amendment denied companies that cooperated with international boycotts certain tax benefits.
  7. Carter placed a vertical line in the left-hand margin next to the portion of the paragraph from the second sentence beginning with “U.S. refusal” to this sentence.